Appeals - Alternate Project

Appeal Brief

Appeal Letter

Appeal Analysis

Background

Hurricane Matthew, declared a major disaster on October 10, 2016, damaged a large part of the Little River Dam (Dam) in the Town of Zebulon, North Carolina (Applicant).  At the time of the disaster, the Applicant and town residents were using the Dam and the surrounding park and river area for recreational use as a community gathering space.  FEMA prepared Project Worksheet (PW) 1831 and estimated costs of $342,214.00 to repair the Dam to its predisaster condition.  The estimate was based on previous dam reconstructions from other locations because the Applicant had not, at the time, determined the repair method, a cost estimate, or scope of work (SOW).  FEMA approved PW 1831 at the aforementioned project costs on November 17, 2017. 

On February 21, 2018, the Applicant requested participation in the Public Assistance Alternative Procedures Pilot (PAAP) Program.  In lieu of Dam repairs, the Applicant requested approval under the PAAP Program of $815,464.00 to develop a master plan, restore the stream, provide restroom facilities, and develop interpretive exhibits to “restore and enhance” the recreational and social use of the Dam area.

In a letter dated April 25, 2018, FEMA denied the Applicant’s request to participate in PAAP.  It noted that in accordance with applicable policy,[1] the Applicant’s deadline for PAAP participation was 12 months from the October 10, 2016 disaster declaration date.  Therefore, FEMA determined that the Applicant’s February 21, 2018 request was not within the 12-month opt-in timeframe, and FEMA further found the Applicant did not provide justification for an extension of time.

First Appeal

The Applicant appealed FEMA’s determination in a letter dated May 24, 2018.  The Applicant explained that it experienced a delay in applying for the PAAP Program due to several reasons.  First, the Applicant spent a considerable length of time clarifying the legal responsibility and ownership of the Dam, as well as engaging the community to determine the best use of the funds.  Ultimately, the community agreed it would better serve the interests of the public welfare not to restore the Dam to its predisaster condition, but rather use the funds to restore and enhance the recreational use of the facility and the surrounding area.  Additionally, the Applicant stated that it took time to determine which program it should seek funding under and worked with FEMA to understand the PAAP Program process.  If the Applicant had known of the deadline, it would have requested a time extension.  The North Carolina Emergency Management (Grantee) forwarded the appeal with a letter of support on June 25, 2018.

In response to a Request for Information, the Applicant explained that it was unfamiliar with the disaster recovery process and that it relied upon guidance from the Grantee and FEMA concerning the PAAP process.  It stated it made about ten time extension requests or inquiries and FEMA and the Grantee encouraged the Applicant to apply for PAAP and submit a time extension as late as four months after the deadline passed.  The Applicant stated it did not sign the PW, but was made aware of it via email.  The Applicant clarified that the monetary amount in dispute was $81,546.40, which it stated represents ten percent of its requested restoration costs ($815,464.00).[2]  Additionally, the Applicant disagreed with the amount obligated in the PW because that estimate was based on previous dam reconstructions from other locations.  The Applicant reiterated that it was delayed in developing a cost estimate because of the clarification in ownership of the property and because of the town’s lengthy decision to make better use of the property.

FEMA Region IV Regional Administrator (RA) denied the first appeal on June 24, 2019.  FEMA found the Applicant did not provide justification to warrant approval of an extension to the timeframe to request participation in the PAAP Program.  The Applicant did not request participation in the PAAP Program until February 2018, approximately four months after the deadline expired and three months after obligation of the original PW.  The Applicant did not make its request prior to project obligation, so participation in the PAAP Program was not permissible.  Despite the Applicant’s reasons for delay, FEMA held that the project was properly processed under standard PA procedures and properly reduced by the alternate project reduction.

FEMA also determined the Applicant forfeited it’s right to appeal the original obligation because it did not file an appeal within 60 days of signing.  FEMA found that if the Applicant disagreed with that amount, it had 60 days from October 18, 2017, the date the Applicant’s representative signed off on the PW reflecting the amount of the obligation, to appeal the determination.  Therefore, FEMA found that any review of the originally estimated amount was not warranted because the Applicant did not file a timely appeal.

Second Appeal

The Applicant submitted a second appeal on August 19, 2019, requesting FEMA overturn the denial to participate in the PAAP Program.  The Applicant states that work to assess the damage and investigate future alternatives began immediately, and certain requirements of the PAAP Program will produce time-savings in project completion.  The Applicant believes that because of the time taken to agree on terms for the legal responsibility of the Dam, those delays justified a time extension to request participation in the PAAP Program.  The Applicant also states it began meetings and site visits with its contractors as early as November 7, 2016 to assess the damage and provide a rough estimate of costs.  These efforts were suspended during negotiations over ownership, but the Applicant adopted the ownership agreement on August 7, 2017.  The Grantee forwarded a letter in support of the Applicant’s appeal on October 18, 2019.

Discussion

Timeframe for Participation in the PAAP Program

Under the PAAP Program, applicants can elect to receive subgrants for large permanent work projects based on agreed-upon fixed cost estimates, instead of the actual costs of completing the eligible SOW.^[3]  At the time of this disaster, the PAAP Program required an applicant and FEMA to agree upon the fixed cost estimate within 12 months after the disaster declaration date, but allowed for an extension on a project-by-project basis.[4]  The request must provide justification for the extension and demonstrate continuing progress on the project.[5]  If FEMA, the grantee, and the applicant could not agree on the cost estimate within the approved timeframe, the project would be processed using standard PA procedures.[6]

In any case where an applicant determines that the public welfare would not be best served by restoring a damaged public facility or the function of that facility, a grantee may request that the RA approve an alternate project.[7]  Federal funding for alternate projects under standard PA procedures will be 90 percent of the federal share of the federal estimate of the cost of repairing, restoring, reconstructing, or replacing the facility and of management expenses.[8]  For alternate projects under the PAAP Program, however, the full federal share remains eligible.[9]

The Applicant did not request participation in the PAAP Program until February 21, 2018, four months after the October 10, 2017 opt-in deadline.  The Applicant asserts that it was delayed in applying for the PAAP Program because of the time spent determining legal responsibility for the Dam and the most effective use of the area for its community, in addition to misguidance from FEMA and the Grantee.  However, the issue of legal responsibility was resolved by August 7, 2017 through the Applicant’s adoption of the ownership agreement, two months before the October 10, 2017 PAAP opt-in deadline.  Throughout the time spent determining legal responsibility, the Applicant did inquire with FEMA about information regarding a time extension, however, the time extension inquiries were regarding the 18-month timeframe for completion of the work in the PW, not the 12-month timeframe to opt into the PAAP Program.  These timeframes are separate and distinct.

As FEMA finds that the Applicant did not meet the deadline to opt into the PAAP Program and does not find its reasons for the delay would justify granting a time extension, its project will be processed under standard PA procedures, which include a 10 percent reduction in eligible costs for alternate projects.

Timeliness of Appeal

Section 423(a) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act provides that any decision regarding eligibility for assistance may be appealed within 60 days after the date on which the applicant is notified of the award or denial of assistance.  Implementing this provision, Title 44 of the Code of Federal Regulations § 206.206(c) requires that applicants must file appeals within 60 days after receipt of a notice of the action that is being appealed.

FEMA decided on first appeal that the Applicant had not appealed the $342,214.00 award within 60 days after it was obligated on November 17, 2017.  However, there is no information in the record to demonstrate that the Applicant was notified of its appeal rights at the time FEMA obligated PW 1831 or in FEMA’s response to the Applicant’s request to apply for the PAAP Program.[10]  The Applicant never appealed the obligated amount—it simply stated, in response to the RFI, that it did not agree with the amount.  The appealable action at issue is the request to participate in the PAAP Program, not the amount of the project cap.  Therefore, the issue of timeliness concerning FEMA’s determination of the obligated amount of the PW is not ripe for review.

Conclusion

The appeal is denied.  The Applicant did not meet the deadline to participate in the PAAP Program and did not provide justification for an extension of time; therefore, its project will be processed under standard PA procedures.  In addition, the Applicant did not appeal the amount obligated in PW 1831; therefore, the issue of timeliness concerning that matter is not ripe for review.