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Direct Result of Disaster

Appeal Brief

Disaster1998-DR-IA
ApplicantCity of Sergeant Bluff
Appeal Type2nd
PA ID#193-71625-00
PW ID#617
Date Signed

Conclusion:  The Applicant did not provide sufficient documentation to show the extent of the damages to a sewer pipe that it claimed were a result of a disaster and that those same damages necessitated sewer pipe replacement rather than repair.

Summary Paragraph

From May 25, 2011 through September 30, 2011, Iowa experienced heavy rainfall and flooding which resulted in pavement failures and damages to an underground sewer pipe.  The Applicant could not determine the total damage until after the deadline for reporting damages to FEMA.  The Applicant requested that it be able to submit a project worksheet beyond the deadline. FEMA denied the request because the Applicant made the request after the deadline.  In its first appeal, the Applicant asserted that it had difficulty in determining if the damages were related to the disaster and again requested to submit a project worksheet for emergency and permanent work.  The FEMA Region VII Regional Administrator partially approved the appeal, funding costs associated with emergency work but not permanent work.  The Applicant did not verify that an entire section of a sewer pipe was damaged as a result of the disaster or that the damage was so severe that the pipe had to be replaced instead of repaired at a lesser cost.  In addition, the RA was unsure as to whether the Applicant followed proper procurement procedures when hiring a contractor.  In its second appeal, the Applicant indicates that it is not able to determine the extent of the damage to the sewer pipe and that it followed proper bidding procedures for hiring a contractor.

Authorities and Second Appeals

  • Stafford Act § 406, 42 U.S.C. § 5172.
  • 44 C.F.R. § 206.223(a)(1).
  • 44 C.F.R. § 13.36(a)(3), (c) & (b).
  • PA Guide, at 85.

Headnotes

  • Stafford Act § 406 authorizes FEMA to make contributions to a “local government for the repair, restoration, reconstruction, or replacement of a public facility damaged or destroyed by a major disaster.”
  • Under 44 C.F.R. § 206.223(a)(1), to be eligible, an item of work must be required as the result of the emergency or major disaster event.  The applicant is responsible for determining the extent of the damage to a facility in order to make a determination about the measures that need to be taken to either repair or replace the facility. (PA Guide, at 85)
    • The Applicant could not verify the extent of damage to the sewer pipe, whether the damage was so severe that replacement rather than repairs was necessary, nor if the damage was a result of the disaster.
    • Because the Applicant is responsible for determining the extent of the damage, FEMA will de-obligate $7,873.20 for ineligible costs associated with video inspection the Applicant used to determine sewer line damage. 
  • According to 44 C.F.R. § 13.36(c), all procurement transactions have to be conducted in a way that provides “full and open competition.”  However, when procurement procedures are not followed, FEMA can analyze the costs to determine if the costs are reasonable.
    • The Applicant did not properly procure the contract for the sewer pipe replacement or the emergency repairs. FEMA found the actual cost of the emergency repairs reasonable. 

 

Appeal Letter

June 9, 2014

Mark SchoutenAdministratorIowa Homeland Security and Emergency Management Division7105 NW 70th AvenueCamp Dodge, Bldg. W-4Johnston, Iowa 50131-1824

Re: Second Appeal – City of Sergeant Bluff, PA ID 193-71625-00, FEMA-1998-DR-IA, Project Worksheet (PW) 617 – Direct Result of Disaster

Dear Mr. Schouten:

This is in response to your letter dated July 15, 2013, which transmitted the referenced second appeal on behalf of the City of Sergeant Bluff (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of its request for funding to replace a sewer pipe.

As explained in the enclosed analysis, I have determined that the work is not eligible because the Applicant cannot verify that the pipe replacement was required as the result of the disaster or the extent of the sewer pipe damage.  Accordingly, I am denying the appeal.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

FEMA’s review of this appeal revealed that in response to the Applicant’s first appeal the FEMA Regional Administrator approved $7,873.20 for ineligible video inspection of the sewer.  By this letter, I am requesting the Regional Administrator de-obligate that funding from PW 617.  In accordance with 44 C.F.R. § 206.206 (b)(1), Appeals, Levels of Appeal, the Applicant may appeal the video inspection determination to the Regional Administrator. 

Please inform the Applicant of my decision. 

Sincerely,

/s/

William W. RocheDirectorPublic Assistance Division

Enclosure

cc:  Beth Freeman      Regional Administrator      FEMA Region VII

Appeal Analysis

Background

From May 25, 2011 through September 30, 2011, Iowa experienced heavy rainfall and flooding, resulting in declaration FEMA-1998-DR-IA.  In the fall of 2011, two pavement failures occurred along Warrior Road, and the City of Sergeant Bluff (Applicant) completed the necessary repairs to the road by February 2012.  On both April 3 and 17, 2012, two sewer pipe collapses occurred in a sewer line running beneath the same street, and the Applicant completed emergency repairs of the damage.  After another pavement failure occurred in the same vicinity and based on information gained during an attempt at a video inspection of the pipe, the Applicant decided to replace a 1,323-foot long section of the pipe.  It awarded a change order for this work to its contractor, Minger Construction, which was completing another sewer project very close to the sewer pipe collapses.  Minger Construction also completed the emergency pavement and sewer repairs. 

On April 27, 2012, the Applicant requested that the Iowa Homeland Security and Emergency Management Division (Grantee) allow it to submit a project worksheet to apply for public assistance funding for the repairs to the pipe.  It acknowledged that the request was untimely and explained that it was not able to predict that the disaster would cause the ground to become unstable and affect the underground piping systems.  The Applicant indicated that it could complete the necessary repairs for $500,000 utilizing micro-tunneling technology.  On May 30, 2012, FEMA denied the request, finding that the Applicant submitted its request beyond the required timeline for identifying damages.[1]

First Appeal

In a first appeal letter submitted on September 6, 2012, the Applicant maintained that it should be able to submit a PW because it had difficulty in determining the cause of the street collapse.  The Applicant explained that after the rain stopped and the flooding receded, the declining water table caused unseen mass movement events underground.  The Applicant requested $107,065.26 for the emergency repair of the pavement failures and sewer repairs and $608,726.95 for replacement of a 1,325-foot long section of sewer pipe.  In support of its appeal, the Applicant submitted groundwater level readings collected before the disaster and invoices for the repair of the pavement failures and pipe collapses. 

FEMA conducted a technical review of the first appeal, which reset the timeframe for response to the Applicant’s appeal.  The FEMA Region VII Regional Administrator (RA) partially granted the first appeal on March 21, 2013. The RA determined that, based on the technical review, it is reasonable that the damages could have been caused by the event at such a late date and approved $102,676.14 for emergency repair of the two pavement failures and sewer pipe collapses.  The RA denied $4,389.12 for emergency repairs to a private residence.  The RA also denied the Applicant’s request for $608,726.95 for the replacement of a 1,323-foot[2] long section of sewer pipe under Warrior Road between D Street and Port Neal Road.  Based on the documentation submitted and the lack of a FEMA site inspection, the RA could not verify that the entire section of the sewer pipe replaced was damaged as the result of the disaster and that the damage was so severe that the pipe had to be replaced and could not be repaired at a lesser cost.  The RA was also unsure as to whether the Applicant followed proper procurement procedures when hiring Minger Construction to complete the permanent work. 

Second Appeal

The Applicant argues in a second appeal letter dated May 20, 2013, that it should be reimbursed $608,726.95 for the replacement of a 1,323-foot long section of sewer pipe under Warrior Road between D Street and Port Neal Road.   The Applicant explains that it followed the correct procedures for securing a contract with Minger Construction, the company who performed the sewer pipe replacement.  Before the disaster, the Applicant initiated and completed a bidding process for another city project entitled, “First Street Lift Station Elimination and Gravity Piping.”  The project did not involve federal or state funds, only funds from the Applicant’s general fund and sanitary sewer utility fund.  The Applicant asserts that it followed the state’s standard public improvements bidding process and provided documents showing that three companies submitted bids on the original project.  The Applicant selected Minger Construction for the original project which had begun in the vicinity of the April 3rd collapse.  The Applicant approved a change order to the original contract to replace the damaged sewer line and states the costs under the change order were “in line with the established bid prices for the project.” 

The Applicant argues that it determined the extent of the damage to the sewer pipe by reviewing the places where the pavement failures occurred, through hydro-jetting and video inspection of the sewer line, and by analyzing groundwater monitoring data.  The Applicant provides the following timeline for the pavement failures and pipe collapses:

  • Pavement Failure – noticed and corrected in Fall 2011
  • Pipe Collapse – occurred April 3, 2012
  • Pipe Collapse – occurred April 17, 2012
  • Pavement Failure – noticed in May 2012

The Applicant states that, based on the location of the various pavement failures and pipe collapses, the sewer system failure occurred along an 866.5-foot section of the sewer pipe.  The Applicant indicates that based on the video inspections, the experience of the contractor on site, and an engineering review of the repairs, “it was determined that the overall condition of the pipe between the first two emergency repairs was in a failed state.”  The Applicant admits it was not possible to know the full extent of the damage to that section of the sewer pipe, and states that it was estimated that additional collapses and failures would occur over time.  The Applicant also submitted groundwater monitoring data to support its position that the damage was caused by the event. 

The Applicant recognizes that it cannot provide visual evidence of the total sewer system failure and provides the following four reimbursement options for FEMA’s consideration: 

  • $608,726.95 for the full 1,323-foot long section of the pipe, as requested in the first appeal;
  • $544,810.62 for replacement of 1,184 feet of the sewer pipe as documented in one of the groundwater data charts;
  • $398,716.15 for replacement of 866.5 feet of the sewer pipe from the location of the April 17th collapse east to Port Neal Road;
  • $102,676.14 for estimated costs for the emergency repair of two additional pavement failures that it would have had to complete if it had not replaced the 1,323-foot long section of the sewer pipe. 

Discussion

Extent of Damage to Sewer Pipe

The Robert T. Stafford Disaster Relief and Emergency Assistance Act Section 406 authorizes FEMA to make contributions to a “local government for the repair, restoration, reconstruction, or replacement of a public facility damaged or destroyed by a major disaster.”[3]  Implementing such authority, Title 44 of the Code of Federal Regulations (C.F.R.) § 206.223 (a)(1) provides that to be eligible, an item of work must be required as the result of the emergency or major disaster event.[4]  The owner of a facility is responsible for determining the extent of the damage to a facility in order to make a determination about the measures that need to be taken to either repair or replace the facility.[5]

In its second appeal, the Applicant makes a connection between receding flood waters and the cause of the damage but failed to provide information about the extent of the damage to the sewer pipe.  The Applicant reviewed the damaged areas and hired a company to conduct inspections of the pipe to determine the full extent of damage; however, the Applicant concluded it was not possible to do so.  Considering the pavement failures and pipe collapses that did occur and the determination that at least an 866.5-foot long section of the pipeline from the location of the April 17th collapse east to Port Neal Road failed, the Applicant determined a prudent approach to avoiding the risk of future damage to the pipe was to replace 1,323 linear feet of pipe.  Notwithstanding the decision made by the Applicant to replace 1,323 linear feet of pipeline, the Applicant has not provided the documentation necessary to support that any length of pipe replacement was required by the event. 

Consistent with the Regional Administrator’s finding in the first appeal, the documentation does support that the emergency repairs were required by the event and those repairs remain eligible for funding.  However, contrary to FEMA policy, the funding approved by the RA in PW 617 includes $7,873.20 for video inspection of the sewer lines.  The Public Assistance Guide provides that “the owner of a facility is responsible for determining the extent of damage; as with any facility, FEMA does not provide funds for general surveys to look for damage, such as video inspection of sewer lines.”[6]

Procurement Procedures

Pursuant to 44 C.F.R. § 13.36 (b)(1), when procuring services under a federal grant, subgrantees (also referred to as applicants) “will use their own procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this section.”[7]  Moreover, all procurement transactions must “be conducted in a manner providing full and open competition.”[8]

The Applicant did not follow the procurement procedures required by 44 C.F.R. § 13.36 when hiring Minger Construction to replace the sewer pipe.  While the Applicant competitively procured its original contract with Minger Construction, the Applicant did not competitively procure the sewer pipe replacement project or the emergency repair work.  44 C.F.R. § 13.43(a)(3) states that when an applicant for federal funding fails to comply with procurement procedures, FEMA may “wholly or partly suspend or terminate the current award.”[9]  The Public Assistance Guide explains that FEMA implements this provision by evaluating project costs to determine reasonableness, and FEMA may reimburse reasonable costs for eligible work.[10]  In accordance with OMB Circular A-87, FEMA evaluates reasonable costs based on the standard “that a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.”[11] In this case, FEMA considers the cost incurred for the emergency repairs reasonable.  The reasonableness of the cost to replace the pipe is not an issue, because the work itself is ineligible as described above.

Reimbursement Options

The first three options suggested by the Applicant involve replacing varying lengths of the sewer pipeline.  The Applicant has not shown that any length of pipeline replacement was required as the result of the event, as discussed above.  The fourth option suggested is for emergency work that was never performed, and it is based on the actual costs already approved in PW 617, $102,676.14.  FEMA has no authority to fund emergency work that was never performed.

Conclusion

The Applicant has not shown that the entire 1,323-foot long section, or 866.5-foot long section, of the sewer pipe was damaged by the disaster or that the damage was so severe that it warranted replacement rather than repair of the sewer pipe.  As such, the replacement of the pipe was not required as the result of the event and is not eligible for public assistance funding.    Further, in partially approving the first appeal, the RA inadvertently provided $7,873.20 for ineligible video inspection of the sewer line.  FEMA will de-obligate the ineligible funding.

[1] Pursuant to 44 C.F.R. § 206.202(d)(ii), applicants have sixty (60) days following its first substantive meeting with FEMA to identify and report damages.  On September 12, 2011, the Federal Coordinating Officer extended the deadline to November 1, 2011 for all eligible applicants.  The Applicant submitted its request for a project worksheet on April 27, 2012.

[2] In the Applicant’s September 6, 2012 First Appeal letter, it makes reference to a 1,325-foot sewer pipe not a 1,323-foot sewer pipe.  There’s no basis as to why this number was lowered based on the information in the administrative record.   In its second appeal, the Applicant appeals FEMA’s denial of funding for a 1,323-foot sewer pipe. 

[3] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 406 (a)(1)(A), 42 U.S.C. § 5172 (a)(1)(A) (2013). 

[4] 44 C.F.R. § 206.223 (a)(1) (2013).

[5] Public Assistance Guide, FEMA 322 at 85 (June 2007) [hereinafter PA Guide].

[6] Id.

[7] 44 C.F.R. § 13.36 (b)(1) (2013).

[8] Id. at § 13.36 (c).

[9] Id. at § 13.43(a)(3)

[10] PA Guide, supra note 5, at 53.

[11] Office of Mgmt. & Budget, Exec. Office of the President, OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments (2013) (codified at 2 C.F.R. § 225).

 

 

Last updated May 28, 2020

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