Immediate Threat, Increased Operating Costs

Appeal Brief

Appeal Letter

Appeal Analysis

Background

From March 25 to April 3, 2021, severe storms, tornados, and flooding impacted areas throughout Tennessee.[1] The Nashville Electric Service (Applicant), a local government entity, requested Public Assistance (PA) funding for overtime force account labor (FAL) and meal expenses associated with staffing a call center. Claimed costs totaled $20,378.39.[2] In a May 26, 2021 letter provided to FEMA, the Applicant described the work performed in the call center, which included receiving reports of outages and hazardous conditions, directing repair efforts, coordinating supplies for field personnel, and dispatching repair crews. It asserted that staffing the call center was necessary to quickly stabilize electrical power services and protect public safety.[3]

FEMA created Grants Manager Project (GMP) 187087 to document the Applicant’s claim but advised the Applicant that, absent documentation demonstrating its call center staff was performing eligible emergency work, the project might be found ineligible.[4] FEMA requested the Applicant provide call logs showing the work performed by call center staff. In response, the Applicant stated that it had no call logs.[5] In a Determination Memorandum dated May 4, 2022, FEMA denied all funding. FEMA found that the available documentation “lack[ed] detailed information that would permit FEMA to verify the claimed overtime hours were tied to the performance of eligible emergency work.”[6] Therefore, FEMA determined that the claimed overtime FAL and meal costs were ineligible.

First Appeal

On July 1, 2022, the Applicant submitted a first appeal requesting FEMA approve $20,378.39. The Applicant stated that almost 76,000 customers within its service area experienced power outages during the disaster, and that its call center staff worked in concert with field personnel to restore power as rapidly as possible. The Applicant noted that “[w]hile our call center is always operational … due to the volume and nature of the calls [during the disaster], we determined that overtime was warranted.”[7] It stated that all claimed work occurred between March 25 and 29, 2021. Regarding meal costs, the Applicant stated that it provided monetary allowances to each call center employee in accordance with its predisaster labor policy. In support of the appeal, the Applicant provided: (1) a summary report depicting the number of outages and calls received during the period in question; (2) a spreadsheet detailing the overtime hours, hourly rates, and costs for each employee claimed; and (3) a copy of its February 2016 labor policy (Policy Manual).[8] In a July 1, 2022, transmittal letter, the Tennessee Emergency Management Agency (Recipient) requested FEMA consider the information provided in the Applicant’s appeal.

On August 28, 2023, the FEMA Region 4 Regional Administrator denied the appeal. FEMA noted that increased costs of operating a facility or providing a service are only eligible “if the services are specifically related to eligible emergency actions to save lives or protect public health and safety,” even when such costs are incurred as a result of the incident.[9] FEMA found that the Applicant had not provided detailed information regarding the work its call center staff performed, and thus had “not shown that the type of work claimed … consisted of disaster-specific tasks that exceeded the normal duties of its call center staff.”[10] Therefore, FEMA determined that the FAL costs were ineligible increased operating costs. FEMA also determined that because the call center employees were not performing eligible emergency work, the claimed costs for meal allowances were also ineligible.

Second Appeal

On October 20, 2023, the Applicant submitted a second appeal, again requesting $20,378.39 in PA funding. The Applicant asserts that the work performed by its employees was directly related to the disaster. It states that the purpose of the call center was to assist in restoring electrical power as quickly as possible, and to provide “the coordination of communications to protect residents and first responders from dangerous conditions.”[11] Thus, the Applicant asserts that its call center employees performed eligible emergency work, and the costs for overtime hours are eligible for PA funding. In support, it transmits a call log (Trouble Report),[12] which it states lists specific details about each call received at the call center from March 25-29, 2021. Finally, the Applicant states that because the work was eligible emergency work, the claimed meal expenses are also eligible, as they were incurred based on the Applicant’s labor policy for overtime work. In a transmittal letter dated October 20, 2023, the Recipient expresses support for the appeal.

Discussion

FEMA is authorized to provide assistance for emergency protective measures to save lives or to protect public health and safety.[13] For emergency protective measures to be eligible, the applicant is responsible for showing the work is required due to an immediate threat resulting from the declared incident.[14] FAL overtime costs for budgeted employees performing emergency work may be eligible based on the applicant’s predisaster written labor policy.[15] Increased costs of operating a facility or providing a service are generally not eligible, even when directly related to the incident.[16] However, short-term increased costs directly related to accomplishing specific emergency health and safety tasks as part of emergency protective measures may be eligible.[17] These additional costs are only eligible if: (1) the services are specifically related to eligible emergency actions to save lives or protect public health and safety or improved property; (2) the costs are for a limited timeframe based on the emergency or exigency of the circumstances; and (3) the applicant tracks and documents the additional costs.[18]

The Applicant submitted the Trouble Report for the first time on second appeal. The Trouble Report lists 340 calls received by the Applicant’s call center staff from March 25 through 29, 2021, and contains remarks indicating the purpose of each call. Many call entries describe customer reports of fallen trees affecting power lines, downed power lines across roads or residences, and other damage (e.g., broken utility poles) and hazardous conditions.[19] Other entries appear to be calls received from the local Office of Emergency Management (OEM), an Emergency Operations Center (EOC), and the local fire department, reporting similar damage and requesting the Applicant’s assistance.[20] Several entries describe hazardous conditions due to flooding and include requests for the Applicant to cut power to affected buildings.[21]

FEMA notes the Applicant’s statement on second appeal that one of the purposes for the call center was “the coordination of communications with residents and emergency crews to protect first responders from dangerous conditions,” and to respond to “requests to cut power when needed for emergency response activities.”[22] As above, the Trouble Report substantiates the Applicant’s claim that call center employees received requests for assistance from emergency responders (the fire department, OEM, and EOC) due to hazardous conditions resulting from the disaster. Further, the Applicant states, and it is reasonable to conclude, that the call center employees acted on these requests, dispatching work crews to respond to and resolve hazards from “wires down, low hanging wires, broken poles, poles on fire, transformers blown or knocked off their base, trees on power lines, and partial power problems.”[23] The Applicant’s call center employees thus assisted with the coordination of the local emergency response to the disaster.[24]

The Applicant acknowledges that its call center was “always operational,” i.e., it was not activated specifically to respond to the declared incident. It also states that, during the disaster, it “determined that overtime was warranted to address the volume of calls coming in.”[25] Thus, the Applicant incurred the overtime costs at issue as the result of an increased demand for the call center’s services, concurrent with the disaster. As such, FEMA properly categorized them as increased operating costs in its previous eligibility decisions. However, with the Trouble Report, the Applicant has shown that call center services during the period in question were specifically related to emergency actions to protect public health and safety resulting from the disaster. Moreover, the Applicant only claims costs incurred over a limited time frame, based on the circumstances of the disaster,[26] and submits documentation tracking the overtime costs.[27] Therefore, the Applicant has met the three criteria required for increased costs related to operating a facility or providing a service to be eligible under FEMA policy.[28] As a result, the claimed overtime force account labor costs are eligible for PA funding.[29]

Regarding meal costs, the Applicant provides its predisaster Policy Manual, which includes provisions for a meal allowance paid to employees working emergency overtime hours.[30] As such, the Applicant did not directly provide meals to its employees.[31] Rather, the meal allowance is part of each employee’s associated overtime costs and is eligible in accordance with the other overtime costs claimed.

Conclusion

The Applicant demonstrated its costs for overtime FAL, including meal allowances, are eligible for PA funding. Therefore, this appeal is granted in the amount of $20,378.39.