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Operation of Fixed Generators

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Desastre4077-DR-OH
ApplicantTrimble Township Wastewater Treatment District
Appeal TypeSecond
PA ID#009-UNSNJ-00
PW ID#982
Date Signed2014-01-17T00:00:00

Citation:  FEMA-4077-DR-OH, Trimble Township Wastewater Treatment District, Operation of Fixed Generators

Cross-Reference: Increased Operating Costs

Summary:  During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage throughout Trimble Township causing downed utility lines and widespread power outages for multiple days.  The Trimble Township Wastewater Treatment District (Applicant) utilized five fixed generators and two portable generators during the event to support emergency protective measures at the wastewater treatment plant, main lift station, and remote lift stations.  FEMA prepared Project Worksheet (PW) 982 to fund the force account labor costs associated with emergency protective measures, fuel for the fixed generators, and usage of the temporary generators based on FEMA equipment rates.  FEMA obligated $8,187 to the PW on December 19, 2012.  Because five of the generators were fixed generators, FEMA did not reimburse the use of those five generators based on FEMA’s schedule of equipment rates, but reimbursed the fuel costs ($3,351).  The Applicant submitted a first appeal for $16,947, asserting that reimbursement for the fixed generator usage should be based on FEMA’s schedule of equipment rates.  The FEMA Region V Regional Administrator denied the first appeal, explaining that the depreciation and ownership costs of permanently mounted generators are built into the cost of operating the facility.  The Applicant submitted a second appeal, for $16,947, reiterating its request for FEMA to apply equipment rates in reimbursing the costs of operating the fixed generators. The Applicant included photographs of the generators and a copy of the Applicant’s insurance policy for the generators with its appeal.  The Grantee’s second appeal transmittal letter states that the Applicant’s insurance covers the generators but that the Applicant does not budget for replacement for the generators.  The Grantee further states that the generators are affixed to concrete slabs outside of each facility, and the generator ownership costs are separate and distinct from those of each facility.  The Grantee’s letter also cites a second appeal under FEMA-EM-3288-FL, dated January 17, 2012, involving a Miami-Dade County, Florida, project for which FEMA funded fixed generator costs using FEMA’s schedule of equipment rates.

Issues:  1. Is Applicant’s usage of fixed generators as emergency protective measures eligible for reimbursement under the Public Assistance program?

              2. Are FEMA equipment rates appropriate for reimbursing fixed generator usage?

Findings:   1. Yes. The Applicant’s costs for usage of fixed generators are eligible.

                   2. No.  Equipment rates include ownership costs.  The only increased cost associated with the usage of fixed generators is the cost of the fuel used.

Rationale:  44 CFR § 206.226; Public Assistance Guide (FEMA 322), pages 54-55, 85; Public Assistance Digest (FEMA 321), page 135

Appeal Letter

January 17, 2014

Nancy J. Dragani
Executive Director
Ohio Emergency Management Agency
2855 West Dublin-Granville Road
Columbus, Ohio 43235-2206

Re: Second Appeal – Trimble Township Wastewater Treatment District, PA ID 009-UNSNJ-00, Operation of Fixed Generators, FEMA-4077-DR-OH, Project Worksheet (PW) 982

Dear Ms. Dragani:

This is in response to a letter from your office dated July 11, 2013, which transmitted the referenced second appeal on behalf of the Trimble Township Wastewater Treatment District (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $16,947 for reimbursement of the operation of fixed generators based on FEMA’s schedule of equipment rates.

As explained in the enclosed analysis, I have determined that the Applicant’s use of fixed generators is eligible; however, the eligible cost associated with that usage is limited to the cost of the fuel consumed during the performance of eligible emergency work.  Therefore, I am denying the appeal.

Please inform the Applicant of my decision.  This determination constitutes the final decision on this matter pursuant to 44 CFR § 206.206, Appeals

Sincerely,

/s/

Deborah Ingram
Assistant Administrator
Recovery Directorate

Enclosure

cc:  Andrew Velasquez, III
      Regional Administrator
      FEMA Region V

Appeal Analysis

Background

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage throughout Trimble Township causing downed utility lines and widespread power outages for multiple days.  The Trimble Township Wastewater Treatment District (Applicant) utilized five fixed generators and two portable generators during the event to support emergency protective measures at the wastewater treatment plant, main lift station, and remote lift stations.  FEMA prepared Project Worksheet (PW) 982 for $8,187 to fund the force account labor costs associated with emergency protective measures, fuel for the fixed generators, and usage of the temporary generators based on FEMA’s schedule of equipment rates.  Because five of the generators were fixed, FEMA did not reimburse the use of those five generators based on FEMA’s equipment rates, but reimbursed the fuel costs only ($3,351). 

First Appeal

The Applicant submitted a first appeal for $16,947 in a letter dated January 28, 2013, asserting that reimbursement for the fixed generator usage should be based on FEMA’s schedule of equipment rates.  The FEMA Region V Regional Administrator denied the first appeal in a letter dated May 7, 2013, explaining that the depreciation and ownership costs of permanently mounted generators are built into the cost of operating the facility.

Second Appeal

The Applicant submitted a second appeal for $16,947 in a letter dated June 3, 2013, reiterating its request for FEMA to apply equipment rates in reimbursing the fixed generator usage.  With the appeal, the Applicant included photographs of the generators and a copy of its insurance policy that includes coverage for the generators.  The Grantee’s second appeal transmittal letter states that the Applicant’s insurance covers the generators, but that the Applicant does not budget for replacement for the generators.  The Grantee further states that the generators are affixed to concrete slabs outside of each facility and the generator ownership costs are separate and distinct from those of each facility.  The Grantee’s letter also cites a second appeal under FEMA-EM-3288-FL, dated January 17, 2012, involving a Miami-Dade County, Florida, project for which FEMA funded fixed generator costs using FEMA’s schedule of equipment rates.

Discussion

Generally, prudent actions taken by an Applicant to ensure the continuation of essential public services and protect lives and public health are eligible for assistance.  However, as specifically delineated in FEMA policy, the cost of obtaining power from alternate sources is considered an increased operating expense and is generally not eligible.  Noting such, policy provides an exception for  “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures may be eligible.”

Application of this guidance necessitates a distinction between portable and fixed generators.  FEMA reimburses the use of portable generators based on FEMA equipment rates or similar set rates.  FEMA equipment rates include such costs as operation of equipment, depreciation, overhead, maintenance, field repairs, fuel, lubricants, tires, Occupational Safety and Health Administration equipment, and other costs incidental to operation.  This method of calculating reimbursement is not applicable to fixed generators or generators that are permanent fixtures because a portion of the costs included in the equipment rates, like depreciation and the other ownership components, are built into the operating and ownership costs of the facility that the fixed generator is installed to support.  Accordingly, FEMA will reimburse fuel costs for fixed generators if they are used to perform eligible emergency work because those are the only increased costs incurred by the applicant as a direct result of the event.  This distinction applies to fixed generators regardless of whether the generators are affixed inside a facility or to a concrete slab outside of a facility. 

The Miami-Dade second appeal referenced by the Grantee involved the preventive measure of running fixed generators at water and sewer plants when there was no actual loss of power.  Although the precise issue in the Miami-Dade appeal was different, like this case, that one found that the cost to operate the fixed generators was eligible for reimbursement and governed by the same public assistance policy cited above.  Unfortunately, however, the direction provided to the Region IV Regional Administrator in executing that decision was silent as to precisely which costs were eligible for reimbursement (fuel v. equipment rate) and consequently misapplied.   

Conclusion

FEMA does not reimburse the use of fixed generators based on equipment rates.  However, if fixed generators are used in the performance of eligible emergency work, FEMA will reimburse the cost of fuel consumed during the performance of that work.  In this case, FEMA has already provided eligible funding for fuel consumption of the fixed generator usage in PW 982.