Legal Responsibility

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster4332
ApplicantHarris (County),
Appeal TypeSecond
PA ID#201-99201-00
PW ID#GMP 4922
Date Signed2020-08-28T16:00:00

Summary Paragraph

During the incident period from August 23 through September 15, 2017, high winds, heavy rains, and extreme flooding from Hurricane Harvey inundated Harris County (Applicant) and damaged the Applicant’s Annex 29 – Agriculture Center (Facility), located on land leased from the U.S. Army Corps of Engineers (USACE).  FEMA assigned Grants Manager Project (GMP) 4922 to document permanent work to the Facility.  Citing a hold harmless provision in the lease, FEMA determined the Applicant assumed the flooding risk and denied Public Assistance (PA) funding.  The Applicant appealed, arguing the lease only addresses the property (land) being leased, not the structures for which the Applicant had legal responsibility.  The FEMA Region VI Regional Administrator denied the appeal, citing the Applicant’s assumption of risk in the terms of the lease.  FEMA noted that it previously addressed this issue for different Applicant-facilities associated with the same USACE lease, and that under a prior disaster, FEMA denied second appeals as the Applicant had notice of the flooding risk and assumed the risk.  In its second appeal, the Applicant reiterates its arguments from its first appeal.

Authorities and Second Appeals

  • Stafford Act § 406(a)(1)(A).
  • City of San Bruno v. FEMA, 181 F. Supp. 1010, 1015-16 (N.D. Cal. 2001).
  • Town of Trophy Club, FEMA-4223-DR-TX (Sept. 13, 2019); Harris Cty. PW 197, FEMA-4269-DR-TX (May 31, 2019); Harris Cty. Multiple PWs, FEMA-4269-DR-TX (May 31, 2019); City of Clarksville PWs 2826 and 5011, FEMA-1909-DR-TN (Dec. 18, 2015); White House Util. Dist., FEMA-1909-DR-TN (Aug. 15, 2013).

Headnotes

  • The Stafford Act grants FEMA discretionary authority to fund disaster-related projects.
    • Per prior second appeal decisions, FEMA does not obligate funding for projects located on USACE property where the Applicant had notice of the flooding risk, and then assumed that risk.

Conclusion

The language in the lease provided the Applicant notice that the Facility was at risk for flooding and that the Federal Government would not be responsible for any damages that may occur as a result.  With such notice, the Applicant assumed the risk, thus, FEMA will not provide PA funding for the Facility.

Appeal Letter

W. Nim Kidd

Chief, Texas Division of Emergency Management

Vice Chancellor – The Texas A&M University System

1033 LaPosada Drive, Suite 370

Austin, Texas 78752

 

Re:  Second Appeal – Harris (County), PA ID: 201-99201-00, FEMA-4332-DR-TX,

      Grants Manager Project (GMP) 4922 – Legal Responsibility

 

Dear Chief Kidd:

This is in response to a letter from your office dated June 10, 2020, which transmitted the referenced second appeal on behalf of Harris County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of Public Assistance (PA) associated with permanent repairs to the Annex 29 – Agriculture Center (Facility), which is located on land leased from the U.S. Army Corps of Engineers.

As explained in the enclosed analysis, the language in the Applicant’s lease agreement with the USACE provided the Applicant notice that the Facility was at risk for flooding and that the Federal Government would not be responsible for any damages that may occur as a result.  With such notice, the Applicant assumed the risk, thus, FEMA will not provide PA funding for the Facility.  Therefore, this appeal is denied.

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.
 

                                                                      Sincerely,

                                                                          /S/

                                                                        Keith Turi

                                                                        Assistant Administrator

                                                                        Recovery Directorate                                                                        

 

Enclosure

 

cc: George A. Robinson

      Regional Administrator

      FEMA Region VI

 

Appeal Analysis

Background

During the incident period from August 23 through September 15, 2017, high winds, heavy rains, and extreme flooding from Hurricane Harvey inundated Harris County (Applicant) and damaged the Applicant’s Annex 29 – Agriculture Center (Facility), located on land leased from the U.S. Army Corps of Engineers (USACE), adjacent to the Addicks Reservoir.  FEMA assigned Grants Manager Project (GMP) 4922 to document permanent repairs at the Facility. 

However, due to a hold harmless provision in the Applicant’s lease with the USACE, FEMA denied Public Assistance (PA) funding for the project through a determination memorandum (DM).  The lease stated that, “the United States shall not be responsible for damages to property  . . .  arising from or incident to the flooding of said premises by the Government or flooding from any other cause.”[1]  Therefore, FEMA determined the lease clearly stated the Facility was at risk for flooding and that the Federal government would not be responsible for any damages that may occur as a result.

 

First Appeal

The Applicant filed its first appeal on September 11, 2019.[2]  While acknowledging that the conditions of the lease “indemnify and hold harmless the [U.S.] Government (consisting of all Executive Branch agencies and departments, except for the American Red Cross) from damages to the propery of the lease and associated costs,”[3] the Applicant argued this only addressed the property (land) being leased, not the structures for which the Applicant had legal responsibility.  In support, the Applicant cited the lease, the 2009 Addicks and Barker Reservoirs Master Plan, and the 2017 Regional General Permits and Nationwide Permits issued by the USACE, all of which the Applicant claimed placed legal responsibility for operating and maintaining the Facility with the Applicant.  The Applicant then noted it had not received financial assistance from the USACE so there was no duplication of benefits.  Finally, the Applicant stated that when the lease agreement was signed in 1965, the “U.S. Government” did not include FEMA. Therefore, it would have been impossible for the parties to the lease to have contemplated Harris County’s exclusion from FEMA grant funds.  The Texas Division of Emergency Management (Grantee) supported and forwarded the Applicant’s first appeal by letter dated October 1, 2019.

The FEMA Region VI Regional Administrator denied the appeal on March 1, 2020 for reasons similar to those outlined in the DM.  FEMA found the Applicant had assumed the risk for any flooding, as the terms of the lease held the Federal Government harmless for damage, including damage sustained to the Facility, caused by flooding from any cause.  FEMA noted it had previously addressed this issue for the Applicant’s facilities associated with the same USACE lease under a prior disaster, and denied those second appeals on this same basis.[4]

 

Second Appeal

The Applicant’s second appeal, dated May 30, 2020, reiterates arguments made in the first appeal.  The Grantee supported and forwarded the Applicant’s second appeal by letter dated June 10, 2020.

 

Discussion

USACE Lease

The Robert T. Stafford Disaster Relief and Emergency Assistance Act authorizes FEMA to provide federal assistance to a local government for the repair, restoration, reconstruction, or replacement of a facility damaged by a declared disaster.[5]  While FEMA is authorized to provide reimbursement to eligible applicants, the Stafford Act does not require FEMA to provide PA funding; meaning FEMA’s authority is discretionary.[6]  Therefore, FEMA has the discretion to not provide federal disaster relief funding through the PA program for facilities which are identified and understood by applicants to be at substantial risk of intentional or natural flooding.[7] 

In the past, FEMA has denied PA funding to restore facilities located on land owned by the USACE, in particular when the instrument leasing the USACE land to a different party includes provisions that identify risks to the facility and hold the Federal Government harmless.[8]  On their face, hold harmless clauses do not apply to federal grant assistance programs such as the FEMA PA program.[9]  However, FEMA considers hold harmless provisions when evaluating the inherent level of risk and as evidence of the state or local government’s awareness and acceptance of risk.[10]

FEMA reviews each project on a case-by-case basis and determines eligibility using the terms of the legal instrument.[11]  If the governing legal instrument includes language that clearly holds the applicant responsible for any flood damage that occurs to its facilities due to USACE actions or inactions, and/or any other causes specified in the legal instrument, FEMA will deny PA funding for the project because inclusion of such language indicates that the risk of damage is great, and that the owner of the facility is aware of and has assumed it, should damage occur.[12] 

Here, the second appeal review centers on section 10 of the lease between USACE and the Applicant.  The lease reads:

The United States shall not be responsible for damages to property or injuries to persons which may arise from or be incident to the exercise of the privileges herein granted, or for damages to the property of the lessee, or for damages to the property or injuries to the person of the lessee’s officers, agents, servants, or employees or others who may be on said premises at their invitation or the invitation of any one of them, arising from or incident to the flooding of said premises by the Government or flooding from any other cause, or arising from or incident to any other governmental activities on the said premises.[13]

The language plainly states that the United States shall not be responsible for damages that arise due to flooding, whether a result of actions by the Federal Government or because of any other cause. 

As noted above, FEMA has consistently denied PA funding to restore facilities located on land owned by the USACE, in particular when the instrument leasing USACE land to a different party includes provisions that identify risks to the facility and hold the Federal Government harmless.  Here, the governing legal instrument (the lease) includes language that clearly holds the Applicant responsible for flood damage that occurs to its property (i.e., the Facility) from any cause, whether the result of USACE action or not.  FEMA finds that the Applicant was aware of and assumed an inherent level of risk associated with operating the Facility within Addicks Reservoir.  Therefore, FEMA will not provide PA funding for the Facility.

 

Conclusion

The language in the lease provided the Applicant notice that the Facility was at risk for flooding and that the Federal Government would not be held responsible for any damages that may occur as a result.  With such notice, the Applicant assumed the risk, thus, FEMA will not provide PA funding for permanent work to the Facility. 

 

[1] Dep’t of the Army, Lease for Pub. Park and Recreational Purposes, at § 10 (July 1, 1965), amended (Jan. 1, 1967), (July 21, 1972), (Apr. 8, 1980), (Aug. 29, 2002), and (Aug. 4, 2004) [hereinafter Lease].

[2] As projects were determined ineligible from the beginning, no site inspections were performed and so, no cost estimates were derived.  With its second appeal the Applicant states the amount in dispute is $3,003,100.00.

[3] Letter from Dir., Fin., Budget Mgmt. Dep’t, Harris Cty., to Div. Dir., Tex. Div. of Emergency Mgmt., at 3 (Sept. 11, 2019).

[4] See FEMA Second Appeal Analysis, Harris Cty., FEMA-4269-DR-TX, Project Worksheet (PW) 197 (May 31, 2019); FEMA Second Appeal Analysis, Harris Cty., FEMA-4269-DR-TX, Multiple PWs (May 31, 2019).

[5] Robert T. Stafford Disaster Relief and Emergency Assistance Act, as amended, § 406(a)(1)(A), 42 U.S.C. § 5172(a)(1)(A) (2012).

[6] FEMA Second Appeal Analysis, Town of Trophy Club, FEMA-4223-DR-TX, at 2 (Sept. 13, 2019); Harris Cty., FEMA-4269-DR-TX, PW 197, at 2-3; Harris Cty., FEMA-4269-DR-TX, Multiple PWs, at 2-3.  See City of San Bruno v. FEMA, 181 F. Supp. 1010, 1015-16 (N.D. Cal. 2001) (finding that FEMA’s decision whether or not to obligate funds is a discretionary decision).

[7] Town of Trophy Club, FEMA-4223-DR-TX, at 2; Harris Cty., FEMA-4269-DR-TX, PW 197, at 3; Harris Cty., FEMA-4269-DR-TX, Multiple PWs, at 3; FEMA Second Appeal Analysis, White House Util. Dist., FEMA-1909-DR-TN, at 3 (Aug. 15, 2013).

[8] Town of Trophy Club, FEMA-4223-DR-TX, at 2; Harris Cty., FEMA-4269-DR-TX, PW 197, at 3; Harris Cty., FEMA-4269-DR-TX, Multiple PWs, at 3; White House Util. Dist., FEMA-1909-DR-TN, at 3.  It is important to note that FEMA found the USACE caused the flooding in the White House Util. Dist. decision—which is in contrast to the situation here.

[9] Town of Trophy Club, FEMA-4223-DR-TX, at 2; Harris Cty., FEMA-4269-DR-TX, PW 197, at 3; Harris Cty., FEMA-4269-DR-TX, Multiple PWs, at 3; White House Util. Dist., FEMA-1909-DR-TN, at 3.

[10] Town of Trophy Club, FEMA-4223-DR-TX, at 2; Harris Cty., FEMA-4269-DR-TX, PW 197, at 3; Harris Cty., FEMA-4269-DR-TX, Multiple PWs, at 3; White House Util. Dist., FEMA-1909-DR-TN, at 3; FEMA Second Appeal Analysis, City of Clarksville, FEMA-1909-DR-TN, at 2 (Dec. 18, 2015).

[11] Town of Trophy Club, FEMA-4223-DR-TX, at 2; Harris Cty., FEMA-4269-DR-TX, PW 197, at 3; Harris Cty., FEMA-4269-DR-TX, Multiple PWs, at 3; City of Clarksville, FEMA-1909-DR-TN, at 2.

[12] Town of Trophy Club, FEMA-4223-DR-TX, at 2; Harris Cty., FEMA-4269-DR-TX, PW 197, at 3; Harris Cty., FEMA-4269-DR-TX, Multiple PWs, at 3; White House Util. Dist., FEMA-1909-DR-TN, at 3.

[13] Lease, at § 10 (emphasis added).

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