Application Procedures, Appeals

Appeal Brief

Summary Paragraph

From September 23 to November 4, 2022, Hurricane Ian impacted Florida, resulting in damage to multiple government vehicles and equipment that were covered under its automobile risk liability and physical damage program, a self-insurance pool, provided to member governmental entities. The Florida Sheriffs Risk Management Fund (Applicant), identifying itself as a county government, submitted a Request for Public Assistance (RPA) with supporting documents, seeking reimbursement of costs paid to repair or replace the damaged vehicles and equipment. FEMA issued a Determination Memorandum denying the Applicant’s RPA, finding the Applicant was a legal entity under state law but did not serve the general public as a whole, and did not meet FEMA’s definition of an eligible public entity. The Applicant appealed, requesting $777,218.00 in incurred costs, and, as support, provided an Internal Revenue Service’s (IRS) guidance and its responses to the IRS eligibility guidance questions. Additionally, the Applicant contended that neither FEMA policy nor state nor federal guidelines required that an applicant must “serve the general public” in order to qualify as a government entity, and that the vehicles and equipment were used to provide direct governmental services to the general public. The Florida Division of Emergency Management (Recipient) forwarded the appeal to FEMA with its support. On January 24, 2024, the FEMA Region 4 Regional Administrator denied the appeal, finding the Applicant did not demonstrate it was a local government eligible to receive Public Assistance (PA) funding. The Applicant submits its second appeal, reiterating its first appeal arguments and withdrawing its request for reimbursement of the damaged inventory costs without prejudice to seek funding from other federal programs.

Authorities

• Stafford Act § 102(8).
• 2 C.F.R. § 200.1; 44 C.F.R. §§ 206.2(a)(16), 206.222.
• PAPPG, at 42-43.
• State Accident Insurance Fund, FEMA-4055-DR-OR, at 3; Archdiocese of New Orleans, FEMA-1603-DR-LA, at 4-5.

Headnotes

• Eligible state applicants include any agency or instrumentality thereof, exclusive of local government. Types of local governments which are eligible applicants include an agency or instrumentality of a local government.
  • The Applicant has not documented it is an instrumentality of a state or local government and is therefore not eligible as an applicant to receive PA funding.

Conclusion

The Applicant has not demonstrated it is an instrumentality of a state or local government. Accordingly, it is not an eligible applicant under the PA program. Therefore, this appeal is denied.

Appeal Letter

Appeal Analysis

Background

From September 23 to November 4, 2022, Hurricane Ian impacted Florida.[1] On October 13, 2022, the Florida Sheriffs Risk Management Fund (Applicant), submitted a Request for Public Assistance (RPA), seeking reimbursement of costs paid to repair or replace vehicles and equipment that were covered under its automobile risk liability and physical damage program, a self-insurance pool provided to member governmental entities. In its RPA and Applicant profile reports, the Applicant identified itself as a county government and generally described the damage as flooded official vehicles and broken-down equipment at multiple member locations. To support its RPA, the Applicant provided a damage inventory list of 149 vehicles and equipment in nine counties with associated repair costs, copies of Florida Statutes (Fla. Stat.) §§ 163.01 and 624.4622, its interlocal agreement, and a legal consultant firm’s opinion letter.[2] On June 23, 2023, FEMA issued a Determination Memorandum (DM) denying the Applicant’s RPA. FEMA found the Applicant was a legal entity under Florida law but did not serve the general public as a whole and did not meet the definition of an eligible local government.

First Appeal 

In a letter dated August 2, 2023, the Applicant submitted its first appeal, requesting $777,218.00 for actual costs to repair or replace its members’ patrol vehicles, undercover or unmarked law enforcement vehicles, trailers, and equipment which it stated were used to provide direct governmental services to the general public. The Applicant disagreed with FEMA’s finding that it functioned as administrator of a self-insurance policy for other public entities, contending it was instead a public agency and instrumentality of local government. It further argued that there was no requirement in FEMA policy or state or federal guidelines that an applicant must “serve the general public” in order to qualify as a government entity. The Applicant supported its appeal with participation agreements, coverage declarations for six county sheriffs’ offices, a self-insurance agreement, a garage liability form, uninsured motorist documents, and references to the Internal Revenue Service’s (IRS) guidance on government entities, instrumentalities, and federal tax obligations.[3]The IRS guidance cited by the Applicant set forth six factors to consider when determining whether an entity is an instrumentality: (1) whether it is used for a governmental purpose and performs a governmental function; (2) whether performance of its function is on behalf of one or more states or political subdivisions; (3) whether there are any private interests involved, or whether the states or political subdivisions involved have the powers and interests of an owner; (4) whether control and supervision of the organization is vested in public authority or authorities; (5) if express or implied statutory or other authority is necessary for the creation and/or use of such an instrumentality, and whether such authority exists; and (6) the degree of financial autonomy and the source of its operating expenses.[4]The Applicant also provided responses to these six factors used by the IRS, arguing that application of these factors affirmatively demonstrate it is an instrumentality that performs a government service. Finally, the Applicant stated its documentation established its legal liability for repair costs of its members’ offices and vehicles. By letter dated September 21, 2023, the Florida Division of Emergency Management (Recipient) forwarded the Applicant’s appeal to FEMA with its support. 

On January 24, 2024, the FEMA Region 4 Regional Administrator denied the appeal. FEMA found the Applicant had not demonstrated it met FEMA’s definition of a local government, or an instrumentality as determined by the IRS guidance. FEMA stated the Applicant did not perform any governmental functions nor did it have the full powers of a governmental entity such as police, fire, or taxation authority.

Second Appeal

In a letter dated March 22, 2024, the Applicant submitted its second appeal, reiterating its first appeal arguments. The Applicant acknowledges that it sought $722,218.00 in its first appeal and states that, as the DM and first appeal determination awarded no costs, it withdraws its request for reimbursement of costs for items listed on the damage inventory. However, the Applicant requests FEMA resolve its governmental status by confirming that it is an instrumentality of local government or by directly stating that FEMA’s first appeal and second appeal determinations will not prohibit it from being awarded future funding through the PA program, other FEMA programs, or other grant funding outside the FEMA umbrella.

The Applicant explains that it submitted the RPA as a county government upon the Recipient’s recommendation because there was no category available for local government instrumentality. The Applicant further asserts that it is a governmental entity and/or performs a governmental purpose and function because it: 1) provides additional services that enhance and improve employee and law enforcement safety and wellness, and 2) is recognized as a local government entity in the federal government’s System of Award Management program and in the U.S. Department of Education Public Service Loan Forgiveness Program. On May 20, 2024, the Recipient forwarded the Applicant’s appeal to FEMA with its support.

Discussion

State and local governments, certain private nonprofit organizations, and Indian tribes or authorized tribal organizations and Alaska Native villages or organizations are eligible to apply for FEMA Public Assistance.[5] Eligible state applicants include any agency or instrumentality thereof, exclusive of local government.[6] Types of local governments that are eligible applicants include a county, municipality, city, town, borough, township, local public authority, school district, special district, intrastate district, council of governments, a regional or interstate government, or an agency or instrumentality of a local government.[7]

Here, the Applicant asserts that it is a public agency and instrumentality of local government whose mission and function is to provide a governmental public service on behalf of its member agencies. As neither the Stafford Act nor its implementing regulations or policies define instrumentality, FEMA, like the Applicant, looked to another federal government agency, the IRS, for guidance in determining whether the Applicant is an instrumentality of a state or local government.[8] 

Utilizing the previously referenced IRS’ six factors and applying them to the Applicant and its provided documentation, show that the Applicant has not demonstrated it is an instrumentality of a state or local government. Rather, the documentation collectively establishes the Applicant is a liability pool created by Fla. Stat. §163.01, which furnishes insurance and claims’ administration services to its membership. Under Florida’s Interlocal Cooperative Act of 1969, powers that are conferred under an interlocal agreement, include the authority to enter contracts, employ agencies or employees, acquire and maintain buildings, acquire/dispose of property, and incur debts and obligations.[9] However, neither the Applicant’s interlocal agreement nor the referenced state law establish that the Applicant is used for a governmental purpose and performs a governmental function.[10]Rather, the participation agreements, coverage declaration agreements, and liability insurance policies document that the Applicant’s purpose and function is to provide reimbursement to its limited membership. 

Additionally, as each individual member of the liability pool has the right under its participation agreement to receive distributions from the Applicant, each member, rather than the general public, has a substantial private interest in the Applicant’s operations and funds. Further, the documentation shows that while the Applicant is directed by a board of currently active sheriffs, the board serves at the pleasure of the members, rather than that of the state or local government. Moreover, the Applicant maintains financial autonomy through being funded by general revenue monies contributed annually by its member agencies, controls its daily activities, and otherwise acts independently of a state or local governments; thus, the Applicant has not demonstrated a state or local government exercises control over the Applicant’s funds or operations. 

Based on the above, the Applicant has not demonstrated it is an instrumentality of a state or local government and therefore, is not eligible to apply for Public Assistance.

Conclusion

The Applicant has not demonstrated it is an instrumentality of a state or local government. Accordingly, it is not an eligible applicant under the PA program. Therefore, this appeal is denied.