Appeal Procedures – Direct Result of Disaster – Environmental Compliance – 705(c)

Appeal Brief

Appeal Letter

Appeal Analysis

Background

During the incident period of April 28 through May 11, 2017, severe storms and flooding occurred in Ozark County, Missouri (Applicant), damaging dozens of low water crossing sites and over 100 road site locations.  Starting in August 2017, the Applicant performed construction work at the County Road 603 low water crossing site (Site 1), which included cleaning up the remains of the damaged slab and replacing it with a concrete box culvert. 

FEMA performed an Environmental Planning and Historic Preservation (EHP) Site Inspection, memorialized in an October 4, 2017 report, which stated the work to Site 1 was almost 100 percent complete at that time.  The report noted that although the low water crossing was originally a dipped concrete slab, it had been replaced with an anchored box culvert, as demonstrated by a photograph included in the report.  In a mitigation report, also dated October 4, 2017, FEMA noted that prior to the disaster, cattle trucks would scrape the roadway because of the vertical curve created by the slab-on-grade design.  However, the new design and construction would address that issue.  This report also noted that the Applicant advised FEMA it desired to use grouted rip rap to dissipate energy and prevent undermining of the crossing structure foundation.

On November 21, 2017, FEMA uploaded the following documents to its grants management database (EMMIE): (1) the Applicant’s budgets for 2015 – 2017 pertaining to road and bridge maintenance costs; and (2) predisaster road and bridge maintenance time sheets from the Applicant with descriptions of work performed at certain locations, including Site 1.  On December 6, 2017, FEMA completed environmental reviews, memorialized in the Record of Environmental Consideration (REC).  It noted that the project was 100 percent complete at that time and commented that although the Applicant changed Site 1 from a dipped concrete slab to a box culvert to accommodate large trucks, there were no environmental concerns that would prevent funding.     

On January 12, 2018, FEMA awarded Project Worksheet (PW) 750, approving $59,628.75 in total project costs for permanent work to repair six of the Applicant’s concrete slab low water crossing sites, one of which was Site 1.[1]  FEMA separated out the costs per site in the PW, and the total costs for Site 1 were $17,514.98.  The Missouri State Emergency Management Agency (Grantee) drew down the total funding obligated for PW 750 on January 22, 2018. 

Following the project’s obligation, the Applicant sought an additional $1,147.50 in funding for a Hydrologic and Hydraulic (H&H) Study at Site 1.  FEMA subsequently issued a second REC on January 31, 2018, which confirmed that regardless of the H&H study cost adjustment, the original environmental determination and clearance remained valid and unchanged.  It verified that no further EHP reviews were required unless there was a change to the scope of work (SOW).  

In a determination memorandum (DM) transmitted to the Applicant and the Grantee on May 16, 2018, FEMA noted that the Applicant had performed work on Site 1 beyond that required to restore it to either its predisaster design or condition.  The DM stated that the Applicant expanded the SOW without Agency approval, and without affording FEMA the opportunity to complete required EHP reviews; therefore, FEMA found the work completed to Site 1 and associated costs of $18,662.48, were ineligible.[2]

First Appeal

In an undated letter that the Grantee received on July 12, 2018, the Applicant appealed FEMA’s denial of funding for Site 1.  In place of requesting approval of $18,662.48, the Applicant requested FEMA grant the costs that would have been incurred had the Applicant simply restored the site to predisaster condition, $5,594.08.[3]  The Grantee forwarded the appeal to FEMA via an August 8, 2018 concurrence letter.  It cited to the provision in FEMA’s Public Assistance Program and Policy Guide (PAPPG) that allows the Agency to fund improved projects at either the costs estimated to restore the facility to predisaster condition, or the actual costs incurred to complete the improved project, whichever is less. 

On October 30, 2018, FEMA transmitted a Final Request for Information to the Applicant and the Grantee, but neither responded.

On March 7, 2019, the FEMA Region VII Regional Administrator (RA) issued a first appeal decision denying the requested $5,594.08.  The RA first determined that the appeal did not satisfy Title 44 Code of Federal Regulations (C.F.R.) § 206.206(a) as the Applicant did not provide a break down of the claimed amount, and additionally did not provide reference to the law, regulation, or policy that supported its appeal.  Second, the RA found the Applicant did not demonstrate the damage was the result of the disaster as it had not established it maintained culverts prior to the disaster.  Last, the RA stated that the Applicant had exceeded the SOW prior to FEMA inspecting the project, which precluded FEMA from performing an environmental review prior to the completion of work.  It additionally determined that the Applicant did not verify it complied with the suitable materials condition of the Nationwide Permit permit because the Applicant had not demonstrated the rip rap used was free from rebar or reinforcing rods. 

Second Appeal

The Applicant submitted its second appeal on May 9, 2019, submitting additional photographs that showed a slab almost entirely covered with water, to demonstrate the disaster washed out most of Site 1.  It also provided a grant summary report from EMMIE listing 15 additional projects FEMA obligated to the Applicant for the disaster.[4]  The Grantee forwarded the appeal on May 10, 2019, attaching a support letter for the requested $5,594.08.

Discussion

Appeal Procedures

Pursuant to 44 C.F.R. § 206.206(a), an appeal must specify the monetary figure in dispute and the provisions in Federal law, regulation, or policy with which the appellant believes the initial action was inconsistent.

Here, the Applicant’s first appeal letter included the monetary amount in dispute, satisfying the first content requirement of 44 C.F.R. § 206.206(a).  The Grantee’s first appeal letter cited to FEMA policy to support the request for funding, thereby specifying the policy with which FEMA’s determination memorandum may have been inconsistent.  Consequently, the first appeal letters satisfy the requirements of 44 C.F.R. § 206.206(a).

Direct Result of Disaster

In order to be eligible for PA funding, an item of work must be required as a result of a major disaster.[5]  To assist in evaluating whether claimed damage was caused by a disaster, FEMA reviews predisaster maintenance records or other documentation, such as predisaster maintenance budgets, to establish the Applicant had a predisaster routine maintenance program.[6]

Before FEMA obligated this project, the Applicant provided: 1) predisaster budgets for 2015 – 2017 pertaining to road and bridge maintenance costs; and 2) predisaster road and bridge maintenance time sheets with descriptions of work performed at certain locations.  The pre-disaster budgets provided include just the sections pertaining to road and bridge maintenance and do not indicate what percentage of the total budget the road and bridge funding represents. FEMA cannot rely on these records alone to establish the existence of a predisaster routine maintenance program.[7]

In contrast, the road and bridge timesheets for the Applicant’s personnel dated January 2016 through May 2017 (excluding January and February 2017), demonstrate routine predisaster maintenance activities.  For instance, the timesheets include descriptions of work (e.g., “hauled gravel, slab work, pothole patch, graded, spread base, fixed holes washed out, checked roads, cleared trees, pour[ed] concrete”) performed on specific road and bridge sites.  One such location was the road associated with Site 1.  The Applicant recorded multiple instances of predisaster grading to County Road 603 from January through September 2016.  This demonstrates the Applicant had a routine maintenance program in effect prior to the disaster; as such, the Applicant has established the damages and resulting work were the result of the disaster.

Environmental Compliance/705(c)

Under the PAPPG, Applicants must make every effort to afford FEMA the opportunity to perform EHP reviews prior to the start of construction for any permanent work project. Proceeding with such a project before FEMA completes EHP reviews jeopardizes FEMA funding.[8]  In certain instances, though, FEMA may grant funding through EHP reviews conducted after construction has completed.[9]

Section 705(c) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) bars FEMA from deobligating any payment to a State or local government if: (1) the payment was authorized by an approved agreement specifying the costs, (2) the costs were reasonable, and (3) the purpose of the grant was accomplished.  FEMA issued FP 205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures (FP 205-081-2), to establish the criteria necessary to implement the three conditions of section 705.  For the third condition, FP 205-081-2 explains that the purpose of the grant is accomplished if the applicant completes the scope of work as described in the obligated PW and supporting documentation.[10]  If all three conditions of section 705(c) are met, FEMA is prohibited from recouping grant funds even if it later determines that it made an error in determining eligibility.[11] 

The first condition of section 705(c) is met as the Grantee has already drawn down the funds obligated for this project.[12]  Regarding the second condition, nothing in the administrative record suggests the costs for the new culvert and associated work were unreasonable, especially considering the costs to restore the other five concrete slab sites funded in PW 750 to predisaster condition ranged from $3,442.43 to $16,410.61. 

Finally, although the PW’s SOW said Site 1 would be “repaired,” FEMA finds the Applicant  satisfied the third condition of section 705(c), notwithstanding the construction of the improved project.  Here, FEMA approved the grant with full knowledge of the work completed.  Three months before the grant’s obligation, FEMA field personnel completed physical inspections of Site 1, taking contemporaneous photographs of the concrete box culvert that had been installed in place of the predisaster concrete slab.  FEMA personnel uploaded the reports and photographs to EMMIE on November 28, 2017, more than one month before the grant’s award.  FEMA also issued the first REC (after the project was 100 percent complete) before project approval, confirming the completion of necessary environmental reviews.  It is apparent therefore from the underlying documentation that FEMA knew the Applicant had already completed the improved project when FEMA conducted post-construction environmental reviews and subsequently approved the actual costs associated with that work. 

The Applicant implicitly acknowledges the work done to Site 1 constituted an improved project by requesting only capped funding.[13]  FEMA therefore erred when it awarded actual costs for Site 1 that far exceed the estimated predisaster restoration costs.  However, as all three conditions of section 705(c) are satisfied, FEMA is prohibited from recouping the previously awarded $17,514.98 in actual costs.[14]  Those costs (pursuant to the federal share allocation) will remain approved for the project.[15] 

Conclusion

The first appeal satisfied the requirements of 44 C.F.R. § 206.206(a).  In addition, the Applicant has demonstrated the damage and associated work to Site 1 were the direct result of the disaster.  Further, although FEMA erred in awarding actual costs for the improved project even though the lesser amount was the estimated predisaster restoration costs, section 705(c) of the Stafford Act precludes deobligation of the previously awarded funding.  This second appeal is granted.  FEMA is prohibited from recouping the previously awarded $17,514.98.