Equipment Replacement

December 21, 2007

Ms. Elizabeth McDonald
MEMA Disaster Recovery Manager
Massachusetts Emergency Management Agency
Executive Office of Public Safety
400 Worcester Road
Framingham, MA 01702

Re: Second Appeal – Town of Hatfield, PA ID 015-29265-00, Equipment Replacement, FEMA-1614-DR-MA, Project Worksheet (PW) 350

Dear Ms. McDonald:

This letter is in response to your letter dated February 3, 2007, which transmitted the referenced second appeal on behalf of the Town of Hatfield (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of assistance for damages to a piece of rental equipment that occurred during FEMA-1614-DR-MA.

Following the heavy rains and flooding event that began October 7, 2005, FEMA prepared PW 305 for $55,225.70 for damages to a submerged Komatsu PC 200 Excavator that the Applicant leased on September 12, 2005. FEMA did not obligate the PW because it determined that the Applicant did not obtain necessary insurance coverage as required by its rental agreement, and because the damage was not incurred in the performance of emergency work as required by Recovery Policy 9525.8, Damage to Applicant-Owned Equipment.

The Applicant submitted its first appeal through the Massachusetts Emergency Management Agency (MEMA) on July 17, 2006, stating that insurance coverage was not available through the National Flood Insurance Program for rented equipment. The Applicant and MEMA also asserted that the rental agreement established the basis for the Applicant’s “legal responsibility” for the repairs to the vehicle and thus makes the costs eligible for FEMA reimbursement.

The Regional Director denied the appeal in a letter dated September 21, 2006, based on 44 CFR §206.223(e), which states, “No assistance will be provided to an applicant for damage caused by its own negligence.” The letter states, “The fact that the Town sent someone to evaluate the situation indicates that the Town recognized the situation was potentially dangerous for the equipment. The Town was also potentially negligent by leaving the equipment in an area where it would be excluded from insurance coverage, regardless of whether the Town had a reason to believe that it would be safe in that location.”

The Applicant submitted its second appeal on November 29, 2006. The Applicant contends that the decision to leave the piece of equipment in the floodplain was reasonable, based on the conditions at the time of the visit by an employee and the employee’s local knowledge of the river. The Applicant submitted two signed affidavits of individuals attesting to the reasonableness of the determination to leave the piece of equipment at the jobsite. The Applicant also asserted that the National Flood Insurance Program and the Massachusetts Division of Insurance had advised that reasonable insurance policies were not available for purchase.

The Applicant’s decision to leave the excavator in the floodplain based on the conditions of the river at the time of the site visit may have been reasonable. However, the Applicant assumed the risk of damage to the excavator in that location because the Applicant did not have insurance coverage for damages incurred in the floodplain and it did not take prudent actions to protect the equipment from damage. The Applicant did not comply with the terms and conditions of the lease agreement, which required the Applicant to obtain and maintain insurance in an amount at least equal to the value of the equipment. Based on review of all information submitted with the appeal, I have determined that the cost to repair the damaged excavator is not eligible for reimbursement pursuant to 44 CFR §206.223(e). Therefore, I am denying the second appeal.

Please inform the Applicant of my decision. My determination constitutes the final decision on this matter as set forth in 44 CFR §206.206.

Sincerely,
/s/

Carlos J. Castillo
Assistant Administrator
Disaster Assistance Directorate

cc: Arthur W. Cleaves
Regional Administrator
FEMA Region I