The issue was whether the county and the university remain eligible for the grant when they did not comply with a condition of the grant award. FEMA awarded a grant with the condition that construction of the safe room was not to begin until FEMA reviewed the design to ensure that it was consistent with the standards in FEMA 361. Drury University began construction of the safe room several months before FEMA completed its review and approved the design. The county and Drury University did not comply with this condition of the grant.
All grant recipients are required to comply with all terms and conditions of the grant. 44 CFR 13.43(a) states in part: "If a grantee or sub-grantee materially fails to comply with any term of an award, whether stated in a Federal statute or regulation, an assurance, in a State plan or application, a notice of award, or elsewhere, the awarding agency may take one or more of the following actions: ( 1) Temporarily withhold cash payments pending correction of the deficiency by the grantee or subgrantee or more severe enforcement action by the awarding agency, (2) Disallow (that is, deny both use offunds and matching credit for) all or part of the cost of the activity or action not in compliance ... " The Region VII Administrator exercised discretion in the 1st appeal to deny funding pursuant to 44 C.F.R. § 13.43(a)(2), even though FEMA determined that the University's safe room design complied with the requirements of FEMA 361. FEMA HQ decided to approve the 2nd appeal by an allowing SEMA to correct the deficiency and meet the grant objective, to save lives.