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Debris Removal-Reasonable Costs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

DesastreFEMA-1491-DR
ApplicantCounty of Henrico
Appeal TypeSecond
PA ID#087-99087-00
PW ID#Multiple PWs
Date Signed2008-07-31T04:00:00
Citation: FEMA-1491-DR-VA, County of Henrico, Multiple PWs

Cross Debris Removal, Reasonable Cost
Reference:

Summary: The Commonwealth of Virginia was struck by severe weather caused by Hurricane Isabel on September 18, 2003. Multiple PWs were written to include $1,956,765 to cover the costs of removing hazardous stumps throughout the county. At project closeout, FEMA determined that the stump removal costs were not reasonable and de-obligated the funding. In response to the first appeal, FEMA approved the $498,065 for removing stumps 24 inches in diameter or larger on a per-stump basis. However, FEMA denied the Applicant’s request for removing stumps with 24¬¬-inch diameter or less on a per-stump basis. Rather, FEMA reimbursed for these costs on an equivalent cubic-yard basis. This resulted in a reduction of $1,464,576.
The second appeal, submitted on September November 7, 2007, argues that FEMA policy in force at the time of the disaster did not prohibit the removal of stumps of 24-inch diameter or less on a per-stump basis and the $1,464,576 should be allowed as a reasonable cost.
Issues: Is the Applicant eligible for reimbursement for removing stumps 24 inches or less in diameter on a per-stump basis?
Findings: No.
Rationale: Office of Management and Budget Circular A-87 Cost Principles for State, Local and Tribal Government; 44 CFR §13.36(f);
44 CFR §206.224, FEMA 325, Debris Management Guide dated April 1999, Appendix F

Appeal Letter

July 31, 2008

Michael M. Cline
Governor’s Authorized Representative
Virginia Department of Emergency Management
10501 Trade Court
Richmond, VA 23236

Re: Second Appeal–County of Henrico, PA ID 087-99087-00
Debris Removal-Reasonable Costs, FEMA-1491-DR-VA
Multiple Project Worksheets (PWs)

Dear Mr. Cline:

This is in response to your letter dated December 20, 2007, which transmitted the referenced second appeal on behalf of the Henrico County (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) partial denial of its first appeal for reimbursement of costs associated with the removal of hazardous stumps. The Applicant requests an additional $1,464,576 in funding.
For reasons explained in the enclosed analysis, I have determined that the Regional Administrator’s decision in the first appeal is consistent with Public Assistance Program regulations and policies. Accordingly, the appeal is denied.
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

Enclosure

cc: Jonathon Sarubbi
Regional Administrator
FEMA Region III

Appeal Analysis

BACKGROUND

Heavy rains and high winds from Hurricane Isabel in September 2003 deposited debris and exposed tree stumps on public and private property throughout Henrico County. FEMA prepared multiple PWs to fund the removal of hazardous stumps throughout the county. At project closeout, FEMA separated the stump work into two categories: stumps that measured less than 24 inches; and stumps that measured greater than 24 inches in diameter. FEMA reviewed these two categories to determine if the costs were reasonable. FEMA determined that the costs to remove stumps greater than 24 inches in diameter were significantly higher than the average costs in Virginia and adjusted reimbursement to reflect the average costs. For those stumps less than 24 inches in diameter, FEMA found the costs unreasonable and funded them based on the cubic yard contract cost.
FEMA’s decisions resulted in a $1,962,641 reduction in funding.

First Appeal

In a letter dated March 5, 2007, the Applicant submitted its first appeal. The Applicant asserted that it competitively bid and properly procured the debris removal contract. In addition, the Applicant stated that FEMA did not provide the Applicant with reasonable rate information. Finally, the Applicant disputed the method that FEMA used to reimburse costs related to the removal of stumps less than 24 inches in diameter.

In a letter dated July 27, 2007, FEMA determined that the costs associated with the stumps greater than 24 inches in diameter were reasonable. Accordingly, FEMA restored $498,065 in funding for this work. FEMA upheld its initial decision to deny $1,464,576, for stumps less than 24 inches in diameter, because the decision was consistent with FEMA’s historical practice and its policy as described in the Debris Management Guide, FEMA 325, dated April 1999. The Applicant requested reimbursement for removing stumps 24 inches or less on a per-stump basis. FEMA historical practice and policy is to reimburse for removing stumps with diameters 24 inches or less on an equivalent cubic-yard basis because the removal of these stumps does not require special equipment.
Second Appeal

The Applicant submitted its second appeal on November 7, 2007. The Applicant makes several arguments, including (1) FEMA never advised the Applicant about restrictions on the smaller stumps; (2) FEMA unreasonably provided a survey of jurisdictional stump removal costs, with an estimation of reasonable costs, two years after the event; (3) FEMA inappropriately applied draft Recovery Division Fact Sheet 9580.7, Eligibility of Hazardous Stump Removal, dated May 16, 2005; (4) the study that supported the draft Recovery Division Fact Sheet 9580.7, captured statistical data and components unsubstantiated for other disasters and for other regions of the country; (5) not all applicants received a copy of the Debris Management Guide;
(6) FEMA provided minimal guidance and never discussed issues regarding stumps less than 24 inches with the Applicant; (7) the Recovery Division Director’s memorandum, dated May 13, 2005, allowed for contract costs for all stumps removed prior to November 30, 2004; (8) the information provided in the Debris Management Guide, FEMA 325, dated April 1999, served as only guidance; (9) the Applicant requested that the United States Department of Agriculture (USDA) Forestry Service comment on Disaster Assistance Policy DAP 9523.11, Hazardous Stump Extraction and Removal Eligibility Policy, dated May 17, 2007. USDA questioned the validity of the policy in the Debris Management Guide, FEMA 325, dated
July 2007; and (10) the Applicant paid substantially more than adjusted rates that FEMA deemed eligible.

Discussion:

The Applicant’s points and FEMA’s position on each follow:

Issue #1: Did FEMA advise the Applicant about restrictions on the smaller stumps?
The Applicant asserts that FEMA staff did not raise the issue until the grant closeout process two years after the disaster. Although the file shows that FEMA representatives met with the Applicant on multiple occasions regarding debris removal issues, it is unclear if this specific issue was discussed before grant closeout. However, FEMA historical practice and policy is to reimburse stumps measuring 24 inches and less on a cubic-yard basis as these stumps do not require any special equipment for removal. Since publication of the Debris Management Guide in April 1999, FEMA has provided reimbursement on this basis.
Issue #2: Did FEMA unreasonably provide a survey of jurisdictional stump removal costs, with an estimation of reasonable costs, two years after the event?

No. The Office of Management and Budget Circular A-87, Cost Principles for State and Local Governments, requires that all Federal grant costs be reasonable. FEMA has determined that the reimbursement of the removal of stumps 24 inches or less in diameter on a “per stump” basis is not reasonable. Stumps measuring 24 inches in diameter or less do not require special equipment for removal and, therefore, are reimbursed on the reasonable cost per cubic yard, using stump conversion factors. The stump conversion factors used by FEMA Region III are applicable and provide a reasonable estimate of the volume of debris from a given tree stump.

Issue #3: Did FEMA inappropriately apply draft Recovery Division Fact Sheet 9580.7, Eligibility of Hazardous Stump Removal, dated May 16, 2005?

No. Historically, FEMA considered stumps less than 24 inches in diameter as burnable debris paid by the cubic yard. FEMA’s Debris Management Guide, Appendix F, lists stumps 24 inches or less in diameter as burnable debris.

Issue #4: Did the study that supported the draft Recovery Division Fact Sheet 9580.7, Eligibility of Hazardous Stump Removal, dated May 16, 2005, capture statistical data and components unsubstantiated for other disasters and for other regions of the country?

No. As an estimating tool, the conversion table provides data that could be applied to converting stumps to cubic yard in any location.

Issue #5: Did applicants receive a copy of the Debris Management Guide?

Yes. FEMA widely distributed the Debris Management Guide, at the time of the disaster operation. Applicants, contractors, and FEMA staff used this document to evaluate, guide and fund projects throughout the disaster operation.

Issue #6: Did FEMA provide guidance? Did FEMA discuss issues regarding stumps less than 24 inches with the Applicant?

Yes. FEMA worked with the Applicant for an extensive period of time to ensure that the Applicant received all available assistance following this disaster. Admittedly, it is unclear from the file if FEMA provided specific guidance on the stump issue while debris operations were underway. However, in accordance with OMB Circular A-87, federal grant programs can only reimburse reasonable costs. FEMA can only fund reasonable costs even if it is not discovered until the closeout process that the costs submitted under the grant are unreasonable.
Issue #7: Did the Recovery Division Director’s memorandum, dated May 13, 2005, allow for contract costs for all stumps removed prior to November 30, 2004? Did FEMA retroactively apply the conversion method and tool?

No. The memorandum clarified the applicability of Disaster Specific Guidance (DSG) #17, Eligibility of Stump Removal Costs. Although FEMA referred to this guidance, as noted in the first appeal response, FEMA only used the conversion table from the 2005 Florida guidance. FEMA used this conversion table becah the conversion table in DSG #17 provided reasonable conversion rates.

Issue #8: Did the information provided in the Debris Management Guide, FEMA 325, serve as only guidance?

No. FEMA historical practice and policy is to reimburse removing stumps with diameters 24 inches or less on an equivalent cubic-yard basis because the removal of these stumps does not require special equipment.
Issue #9: Are the terms used the Disaster Assistance Policy DAP 9523.11, Hazardous Stump Extraction and Removal Eligibility Policy, dated May 17, 2007, and the Debris Management Guide, FEMA 325, dated 2007, ambiguous?

No. These documents clearly state FEMA’s policy on eligibility of stumps.

Issue #10: Are the FEMA adjusted rates reasonable? The Applicant paid substantially more than adjusted rates that FEMA deemed eligible.

Yes. FEMA reimbursed the reasonable costs for removing the stumps on an equivalent cubic-yard basis. The Applicant entered into a contract that charged an unreasonable per. stump rate.
CONCLUSION:

For the reasons discussed above, the Applicant’s request for $1,464,576 is denied.