Debris Removal – Construction and Demolition – Debris Removal – Vegetative –

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	4280
Applicant	Pasco County
Appeal Type	Second
PA ID#	101-99101-00
PW ID#	PW 334
Date Signed	2020-06-08T00:00:00

Summary Paragraph

Hurricane Hermine, declared a major disaster on September 28, 2016, deposited debris that blocked the ingress and egress of the general public in Pasco County (Applicant).  As a result, the Applicant completed debris removal operations from August through September 2016.  In April 2017, FEMA drafted Project Worksheet (PW) 334, documenting $87,598.59 in total project costs for the scope of work (SOW) for debris removal operations completed the prior year.  FEMA awarded the project in October 2017.  Thereafter, the Applicant requested a change in SOW to the project, to include tipping fees and DAC.  It stated that it hired a consulting firm, Metric Engineering, Inc. (Metric), in July 2017 to review all projects for this disaster.  Metric identified the tipping fees as missing costs through its review, which also resulted in claimed DAC incurred from July through September 2017.  FEMA denied the change in SOW request because it did not satisfy any of the circumstances outlined in FEMA policy that allow adjustment to a small project award.  On first appeal, the Applicant reiterated its request.  Regarding tipping fees, it submitted documentation that showed it waived the requested tipping fees to citizens, contractors, and internal departments as a result of the disaster.  Concerning DAC, it produced spreadsheets that included general work descriptions.  The FEMA Region IV Regional Administrator found that the Applicant had not produced documentation that allowed FEMA to verify the total, eligible costs of tipping fees.  Concerning DAC, FEMA stated the Agency could not determine that the work was eligible and necessary.  On second appeal, the Applicant reiterates previously raised arguments.    

 

Authorities and Second Appeals

• 2 C.F.R. §§ 200.403(a), 200.404(a).
• 44 C.F.R. § 206.224(a)(1).
• PAPPG, at 37-38, 41, 55-56, 139, 152.
• PAAP Pilot Program Guide for Debris Removal (Version 4), at 5.
• La. State Univ. Health Care Servs. Div., et. al., FEMA-1786-DR-LA, at 6; Chambers Cnty., FEMA-1791-DR-TX, at 7.
   

Headnotes

• FEMA policy states that FEMA cannot provide PA funding for revenue lost as a result of the disaster, such as when states open a toll road and do not charge a toll, or when states waive the normal fee for ferry service to encourage alternate transportation after an incident.
  • Here, the Applicant waived the tipping fees as a result of the disaster and now requests reimbursement from FEMA to recoup those lost costs.  As the tipping fees represent revenue lost as a result of the disaster, they are ineligible for funding. 
• 2 C.F.R. § 200.403(a) provides that in order to be allowable, costs must be necessary and reasonable for the performance of the federal award.
  • Here, the Applicant already completed the substantive work by the time FEMA prepared the draft PW, prior to the Applicant’s hiring of Metric.  In addition, the obligated PW (approved after Metric’s work) contained the same SOW and project costs as those included in the earlier draft PW.  Therefore, the Applicant has not demonstrated the claimed DAC is associated with work that was either necessary or reasonable for the performance of PW 334.

 

Conclusion

The tipping fees represent loss of revenue, and are consequently ineligible for funding.  In addition, because the Applicant has not demonstrated the claimed DAC pertains to work that was either necessary or reasonable for the performance of the federal award, those costs are also ineligible.  Therefore, FEMA denies the request to adjust the approved funding of this small project. 

Appeal Letter

Appeal Analysis

Background

 

On September 28, 2016, the President declared Hurricane Hermine a major disaster.  The disaster, which had an incident period of August 31 through September 11, 2016, deposited 2,674.35 tons of construction and demolition (C&D) debris within Pasco County (Applicant), blocking the egress and ingress of the general public.  The Applicant also documented that, post-disaster, 14 trees were leaning or falling over on hiking and walking trails.  Since the damages posed an imminent public health and safety threat, the Applicant hired contractors to complete debris removal, monitoring, and disposal. 

 

On April 4, 2017, FEMA prepared Project Worksheet (PW) 334 to document $87,598.59 in total project costs for the debris removal operations, with the final disposal site listed as Pasco County Resource Recovery Facility (Landfill).  As part of the PW preparation, FEMA uploaded to its grants management system (EMMIE) a contract summary record documenting costs from Ceres Environmental Services, Inc. (Ceres) for the collection and hauling of the C&D debris to the final disposition site, as well as expenses for the debris monitoring and hazardous tree removal.  It also uploaded a permit renewal for the Landfill that listed the Applicant as the permittee.

 

On October 19, 2017, FEMA awarded PW 334 as a small project, approving $87,598.59 in total project costs under the Accelerated Debris Removal Public Assistance Alternative Procedures Program for the aforementioned debris removal operations completed between August 31 and September 29, 2016.    

 

In June 2018, the Applicant requested an amendment to PW 334 to address a change to the scope of work (SOW) and to correct missing debris disposal fees, materials, and direct administrative costs (DAC).  The Applicant stated that it hired a consulting firm, Metric Engineering, Inc. (Metric), in July 2017 to review all projects for this disaster.  As a result of the review work associated with the DAC, Metric identified missing debris disposal costs.  The Florida Division of Emergency Management (Grantee) forwarded the request in August 2018 with a letter of support.

 

In a determination memorandum, FEMA denied the request because it did not satisfy any of the circumstances that allow adjustment to a small project award outlined in FEMA policy.[1]

 

First Appeal

 

The Applicant appealed FEMA’s denial, providing documentation pertaining to the requested tipping fees and DAC for support.  The tipping fees’ documentation noted that the Applicant had internally paid/reimbursed itself $43,962.35.  The Applicant transferred this amount from its General Fund to its Solid Waste Fund for tipping fees that it waived to citizens, contractors, and internal departments as a result of the disaster.  The documentation also included a Customer/Material Report (Report) that itemized inbound disposal by tonnage, totaling 775.35 tons.  The Report listed dates of disposal from September 4, 2016 to October 21, 2016.  Lastly, there was an undated table allocating: (1) 356.44 tons to residents; (2) 253.96 tons to Ceres; and (3) 164.95 tons to internal county departments. 

 

The DAC documentation contained invoices, purchase orders, proof of payment, time sheets, and spreadsheets, documenting work completed from July 24 through September 18, 2017.  The documentation for this project included four descriptions of work completed (with each being noted that it related to this project):

 

1. activities to collect damage data, invoices, estimates, and support documentation;

2. sorting and reviewing damage data, invoices, estimates, and support documentation;

3. reviewing and validating damage data, invoices, estimates, and support documentation; and,

4. reviewing and validating damage data, invoices, estimates, and support documentation while writing Project Worksheet and adding tipping fees and other errors and omissions left out by FEMA Project Specialist.

 

The Applicant requested FEMA revise the SOW on the basis the Agency erred when writing PW 334.  The Grantee recommended FEMA approve the appeal, emphasizing that FEMA may adjust an approved amount on a small project if the PW contains inadvertent errors or omissions. 

 

FEMA thereafter transmitted a Request for Information (RFI), asking for additional documentation that supported the requested costs.  For instance, FEMA requested the Applicant explain how it calculated the tipping fees’ reimbursement, as Ceres’ load tickets did not correlate with the Applicant-provided Report.  It additionally requested the Applicant provide a more detailed description of the DAC work completed to justify the time claimed for certain tasks. 

 

The Applicant responded by first clarifying the claimed tipping fees did not pertain to haul loads associated with Ceres.  It resubmitted the Report to illustrate tipping fees were only associated with disposal by force account labor (FAL) and the general public; FAL disposed of 418.91 tons of debris and the general public disposed of 356.44 tons of debris.  At a rate of $56.70 per ton, this amounted to $43,962.35 for the total 775.35 tons.  The Applicant then explained the basis for the requested DAC.  It stated Metric originally performed a 20 percent audit, then (due to errors discovered) performed an additional 20 percent audit of the documentation.  According to the Applicant, because Metric again found errors, it needed to review thousands of documents to ensure FEMA eligibility.  This work totaled $46,845.00 in claimed DAC.

 

In a first appeal decision dated September 19, 2019, the FEMA Region IV Regional Administrator denied the requested $90,807.35.  Regarding the tipping fees, FEMA found that the Applicant had not produced documentation that allowed FEMA to verify the total, eligible costs of debris disposal.  Concerning DAC, FEMA stated the Agency could not determine that the work was eligible, necessary, completed within a justifiable length of time, and in accordance with sound business practices.  Specifically, FEMA found that costs were submitted for duplicate tasks, which was not reasonable or a prudent use of federal funds; and, the supporting documentation did not contain enough detail for FEMA to validate the work.

 

Second Appeal

 

In the Applicant’s second appeal, it reiterates previously raised arguments.  It also explains that the work associated with the DAC consisted of reviewing all backup documentation to ensure no other eligible costs were mistakenly excluded from the project the way the tipping fees had been, and collecting and validating documentation.  The Grantee forwarded the appeal with a letter of support.

 

Discussion

 

Small Project Cost Adjustment

 

FEMA will only adjust the approved amount of an individual small project once obligated, if: (1) the Applicant did not complete the approved SOW; (2) the Applicant requests additional funds related to an eligible change in SOW; (3) the PW contains inadvertent errors or omissions; or, (4) actual insurance proceeds differ from the amount deducted in the PW.[2]  In those cases, FEMA only adjusts the specific cost items affected.[3]

 

Here, the Applicant bases its request to adjust this small project’s approved costs on the assertion the PW contained inadvertent errors or omissions.  However, FEMA may also adjust the approved costs of a small project if the additional funds are related to an eligible change in SOW.  Therefore, FEMA will review the request for tipping fees and DAC to determine whether to adjust the Public Assistance (PA) funding for this small project.

 

Debris Disposal Costs – Tipping Fees/Loss of Revenue

 

FEMA may provide financial assistance for debris removal that is in the public interest, such as removal that is necessary to eliminate immediate threats to life, public health, and safety.[4]  To that end, FEMA provides PA funding for various costs related to disposing of debris.[5]  This includes landfill tipping fees that are directly related to landfill operations.[6]  However, FEMA cannot provide PA funding for revenue lost as a result of the disaster, such as when states open a toll road for evacuation and do not charge a toll, or when states waive the normal fee for ferry service to encourage alternate transportation after an incident.[7]

 

Here, as the Landfill’s owner (evidenced by the permit renewal identifying it as the permittee), the Applicant waived tipping fees related to this disaster for citizens, contractors, and internal departments.  Instead of charging the fees, it reimbursed itself the waived fees from its General Fund, and now requests PA funding to recoup those lost costs.  However, because the tipping fees represent revenue lost as a result of the disaster, they are ineligible for PA funding. 

 

Additionally, the Applicant’s Report lists disposal amounts totaling 775.35 tons, but there is no other independent documentation in the administrative record that verifies that this is consistent with the amount of debris actually deposited at the Landfill.  There is also a discrepancy between the Applicant’s documentation versus what it states on appeal.  The Applicant’s documentation included an undated table that allocated 253.96 tons to Ceres, as well as including Ceres when calculating the total tipping fees of $43,962.35.  On appeal, however, the Applicant states that no tipping fees are attributable to Ceres and all costs stem from debris disposed of by FAL and the general public. 

 

Finally, FEMA approved costs under this project for debris operations completed from August 31 through September 29, 2016.  The Report, however, included disposal dates through October 21, 2016.  Therefore, the Report includes certain dates that are outside the 30-day SOW period approved for this project.  Consequently, even if they were otherwise eligible, any tipping fees associated with disposal dates from September 30, 2016 through October 21, 2016 would still be ineligible under PW 334.

 

For all the reasons above, the request for tipping fees is denied.

 

Direct Administrative Costs/Reasonable Costs

 

Administrative costs that can be identified separately, tracked, charged, and accounted for directly to a specific eligible project are eligible as DAC.[8]  For example, costs associated with reviewing the PW; preparing small projects; and, collecting, copying, filing, or submitting documents to support the claim, are eligible as DAC provided they meet the other aforementioned requirements.[9]  Only DAC related to eligible debris removal work is eligible.[10]

 

Additionally, in order to be allowable, costs must be necessary and reasonable for the performance of the federal award.[11]  In determining reasonableness, consideration must be given to whether the cost is of a type generally recognized as ordinary and necessary for the proper and efficient performance of the federal award.[12]  The burden to substantiate appeals with documented justification falls exclusively the the applicant, and hinges upon the applicant’s abilility to produce not only its own records but to clearly explain how those records are relevant to the appeal.[13]

 

Here, the Applicant has not demonstrated there was any action (e.g., reviewing the PW or collecting, copying, filing, or submitting documents) that Metric did, or needed to do, to support the eligibility of costs documented in PW 334.  In April 2017, FEMA prepared the PW, documenting $87,598.59 in total project costs for debris removal operations completed the previous year.  The Applicant then hired Metric in July 2017 to review all projects for this disaster.  For PW 334, the Applicant explains that Metric’s work (completed from July through September 2017) consisted of collecting, reviewing, and validating documentation to ensure inclusion of all eligible costs.  Yet, when FEMA obligated the project in October 2017, it contained the same SOW and associated project costs as those originally present in FEMA’s draft PW (prepared before the Applicant hired Metric).  In contrast to the Applicant’s argument for why it engaged Metric, FEMA finds no error or omission to this version’s SOW and total approved project costs.[14]     

 

Therefore, the Applicant has also not identified specific work Metric did that facilitated either the granting of this project, or the performance of the award.  According to EMMIE’s workflow history for this project, FEMA completed substantive reviews that recommended eligibility of the draft PW’s SOW and costs by July 5, 2017, three weeks before Metric’s first DAC entry.[15]  Therefore, the costs associated with the first three descriptions of work identified in the first appeal documentation (i.e., activities to collect, sorting, reviewing, and validating, the damage data, invoices, estimates, and support documentation), were neither necessary nor reasonable for the performance of this small project federal award. 

 

Regarding the fourth description of work that pertains to the tipping fees or other errors and omissions purportedly left out by FEMA, these costs are not related to eligible work.  First, FEMA has found the tipping fees are not eligible for PA funding.  Second, FEMA has not found the existence of errors or omissions that result in additional eligible costs.  Therefore, the DAC associated with that work were also not necessary or reasonable for the performance of this federal award.

 

Based on the above, the Applicant has not demonstrated that the claimed DAC are eligible for PA funding.[16]

 

Conclusion

 

The tipping fees represent loss of revenue, and are consequently ineligible for PA funding.  In addition, because the Applicant has not demonstrated the claimed DAC pertains to work that was either necessary or reasonable for the performance of the federal award, those costs are also ineligible.  Therefore, FEMA denies the request to adjust the approved funding of this small project. 

 

[1] See generally Public Assistance Program and Policy Guide, FP 104-009-2, at 139 (Jan. 1, 2016) [hereinafter PAPPG] (FEMA will only adjust the approved amount of an individual small project once obligated, if: (1) the Applicant did not complete the approved SOW; (2) the Applicant requests additional funds related to an eligible change in SOW; (3) the PW contains inadvertent errors or omissions; or, (4) actual insurance proceeds differ from the amount deducted in the PW).

[2] PAPPG, at 139.

[3] Id.

[4] Title 44 Code of Federal Regulations (C.F.R.) § 206.224(a)(1) (2015).

[5] PAPPG, at 55.

[6] Id., at 56.

[7] Id., at 41.

[8] Id., at 37, 152.

[9] Id., at 38.

[10] Public Assistance Alternative Procedures (PAAP) Pilot Program Guide for Debris Removal (Version 4), at 5 (June 28, 2016).

[11] 2 C.F.R. § 200.403(a) (2016).

[12] Id. § 200.404(a).

[13] FEMA Second Appeal Analysis, Chambers Cnty., FEMA-1791-DR-TX, at 7 (May 26, 2017).

[14] Although FEMA amended PW 334 on March 29, 2018, to reflect an 85 percent federal cost share allocation rather than the 75 percent originally allocated, the SOW and total approved project costs remained the same.  Of note, in a January 24, 2018 email, the Applicant expressed appreciation for the Grantee (not Metric) pointing out this error.

[15] FEMA’s initial reviewer, legal reviewer, insurance reviewer, and environmental and historic preservation reviewer, all recommended PW 334 be eligible as of July 5, 2017. 

[16] Cf. Second Appeal Analysis, La. State Univ. Health Care Servs. Div., et. al., FEMA-1786-DR-LA, at 6 (Mar. 12, 2019) (determining that claimed DAC were unreasonable and unnecessary, and therefore ineligible for PA funding, when substantive work was completed several years prior to the Applicants hiring the DAC consulting firm).