705(c)

Appeal Brief

Appeal Letter

Appeal Analysis

Background

Hurricane Wilma struck Broward County, Florida in October 2005 causing a large amount of vegetative debris on the Broward County School Board’s (Applicant) school grounds and public rights-of-way located within its boundary.  The Applicant contracted for debris removal work, including grinding stumps that were uprooted by the disaster.  FEMA prepared Project Worksheet (PW) 6235 to document disaster-related debris removal work.  Under the General Comments section of PW 6235, FEMA personnel noted, “[t]he Project Officer deducted the cost of all stumps smaller than 24”, and considered the stump grinding process to be unusually high.”[1]  The note is dated April 8, 2006.  As such, FEMA deemed this work ineligible prior to closeout and awarding final eligible costs.

On October 19, 2010, the Department of Homeland Security Office of Inspector General (OIG) issued an audit report[2] that provided findings and recommendations related to the Applicant’s grant funds awarded after Hurricanes Katrina and Wilma.  Regarding PW 6235, the OIG questioned $1,924,305.00 in awarded costs due to inadequate source documentation, but stated, “[t]he questioned costs could be reduced if the School Board can provide adequate source documentation to the State/FEMA closeout team to support eligible activities...”[3]  Following issuance of the audit report, FEMA performed a closeout of the project, reviewed the Applicant’s documentation of associated costs, deducted $735,440.00 related to grinding stumps that were 24 inches or less in diameter and addressed concerns raised by the OIG.  FEMA obligated $1,986,381.00 in final eligible costs for the debris removal project in Version 3 of PW 6235.  On June 8, 2012, FEMA disallowed an additional $196,315.00 related to grinding stumps 24 inches and greater in diameter in Version 4 of PW 6235 after a review of the PW due to the OIG audit.[4]  The Applicant notified the Grantee of its intent to appeal Versions 3 and 4 of PW 6235 on August 15, 2012.[5]

First Appeal

The Applicant appealed FEMA’s decision denying funding for contract work to grind stumps in an October 30, 2012 letter.  The Applicant argued that FEMA found the work eligible during the original project scope and closeout.  The Applicant asserted that, based on FEMA’s Debris Management Guide, work to remove and grind stumps was permissible because it eliminated an immediate threat, was necessary and cost effective.  The Applicant requested that FEMA re-obligate $931,755.00 for costs associated with grinding stumps less than 24 inches and 24 inches and greater in diameter.  The Grantee forwarded the Applicant’s first appeal to FEMA Region IV in a letter dated April 15, 2014, emailed to FEMA on May 22, 2014. 

FEMA Region IV sent a Final Request for Information (RFI) dated August 22, 2014.  The request indicated that the records lacked documentation supporting reimbursement for stump grinding work performed in connection with debris removal activities and afforded the Applicant an opportunity to supplement it.  In a letter dated September 17, 2014, the Applicant responded by submitting a certified statement from its contractor attesting to the hazardous, wide-spread nature of the disaster generated debris and a CD containing photographs documenting the effects of the debris on the Applicant’s facilities.

In a letter dated January 15, 2016, the Region IV Regional Administrator (RA) denied the first appeal.  She determined that the request for costs associated with grinding stumps less than 24 inches in diameter was untimely because the eligibility determination was made in March 2006.  Further, the RA denied funding related to grinding stumps 24 inches or greater in diameter because the Applicant did not demonstrate that the stumps were removed to eliminate immediate threats to life, public health and safety, as required by Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.224. 

Second Appeal

In its second appeal, dated April 19, 2016, the Applicant asserts that FEMA is prohibited by section 705(c) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) from retroactively deobligating funding for stump grinding and requests that FEMA re-obligate $196,315.00 in funding disallowed in Version 4 of PW 6235.  The Applicant cites to the ruling in South Florida Water Management District v. FEMA[6] to demonstrate that FEMA is prohibited from recouping grant funds in this instance because payment was authorized in PW 6235, Versions 0 and 3, the closeout version of PW 6235 found no violations of post-award terms and conditions, and the costs were reasonable.  The Applicant further argues that, regardless of Stafford Act § 705(c) prohibitions, the work is eligible because it was necessary to eliminate an immediate threat to life, public health and safety at its facilities.

Discussion

Appeal Timeliness

Pursuant to section 423 of the Stafford Act, an Applicant may appeal any decision regarding eligibility for, from, or amount of Public Assistance within 60 days after the date on which the applicant for such assistance is notified of the award or denial of award of such assistance.[7]  Implementing Stafford Act § 423, 44 C.F.R. § 206.206(c)(1) states an eligible applicant may appeal any determination previously made related to an application for or the provision of Federal assistance.[8]  Neither the Stafford Act nor 44 C.F.R. provides FEMA authority to grant time extensions for filing second appeals.[9]

The subject of this second appeal is $196,315.00 in grant assistance deobligated in Version 4 of PW 6235.  FEMA obligated Version 4 on June 8, 2012.  The Applicant was aware of this deobligation by August 15, 2012.[10]  However, the Applicant did not appeal Version 4 of PW 6235 until October 30, 2012,[11] 144 days after FEMA obligated Version 4 of PW 6235 and 76 days after the Applicant acknowledged it was aware of the new version.  As such, the Applicant’s first appeal was untimely as it was submitted beyond the 60-day statutory and regulatory timeframes.  Due to the untimely submittal, the Applicant exhausted its appeal rights regarding FEMA’s determination that grinding stumps 24 inches and greater was ineligible at the time it submitted its first appeal. 

Stafford Act Section 705(c) Applicability

Section 705(c) of the Stafford Act provides that a state or local government is not liable for reimbursement or any other penalty for any payment made pursuant to the Stafford Act if the payment was authorized in an approved agreement specifying the costs, the costs were reasonable, and the purpose of the grant was accomplished.[12]  FEMA issued FP-205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures, to establish the criteria necessary to implement section 705.  If all of Stafford Act section 705(c)’s criteria are met, FEMA is prohibited from recouping grant funds even if it later determines that it made an error in determining eligibility.[13]  Section 705 must, however, be read in context with all sections of the Stafford Act, especially in this case section 423.  As reflected above, section 423 affords applicants 60 days after receipt of notice to appeal any eligibility determination.  After the 60-day period ends, an applicant’s right to appeal is exhausted, the opportunity to seek remedy through the administrative PA appeals process lapses, and the Agency’s action becomes final.  Consistent with this element of finality, FP-205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures, provides that the 705(c) prohibition does not apply where appeal rights are exhausted and FEMA has made a final administrative decision.[14]  A more expansive interpretation of Section 705’s bar against recovering funds would otherwise render the finality of section 423 inoperative or superfluous.[15]

Here, FEMA obligated costs for grinding stumps 24 inches and greater in Version 3 of PW 6235, but deobligated the same costs in Version 4 after it determined the work was ineligible.  The Applicant decided to appeal the eligibility determinations made in Versions 3 and 4 simultaneously in its October 30, 2012 first appeal letter.  However, the Applicant’s appeal of eligibility determinations made in both versions of PW 6235 was untimely by October 30, 2012.  Even if, arguendo, the three criteria of Stafford Act § 705(c) were met, the section’s prohibition against recovering funds is not applicable because the Applicant exhausted its appeal rights by failing to submit its first appeal within the statutory timeframe.  As the Applicant exhausted its appeal rights, the initial eligibility determination is the final administrative decision because the Applicant did not seek relief through the administrative adjudicatory process in a timely fashion.  Consequently, FEMA is not precluded from recovering funds deobligated in Version 4 based on Stafford Act § 705(c).  

Conclusion

Pursuant to Stafford Act § 423 and 44 C.F.R. § 206.206, the Applicant’s first appeal of Version 4 of PW 6235 was untimely.  Therefore, the second appeal is denied.  In addition, Stafford Act § 705(c) is not applicable because the Applicant exhausted its appeal rights regarding PW 6235.