Alternate Project, Environmental Compliance

Appeal Brief

Appeal Letter

Appeal Analysis

Background

On August 29, 2005, high winds and heavy rains from Hurricane Katrina caused substantial damage to St. Bernard Parish Government’s (Applicant) Torres Park.  Following a site inspection, in which it found no environmental issues, FEMA prepared Project Worksheet (PW) 1633 in January 2006 to obligate funds to repair damage throughout the park.  Among the facilities damaged in the park were three gazeboes and restroom facilities.  In April 2010, FEMA also prepared a separate project worksheet (PW 14293) in order to rebuild the restrooms within the park.  In November 2010, FEMA determined the cost of repairs for the gazeboes exceeded the cost of replacement and obligated funds for reconstruction.  The Applicant requested separate PWs for the three gazeboes, and as such, FEMA prepared PW 19500 for Gazebo #1, obligating $158,522.10 in costs.  In February 2011, the Applicant requested Gazebo #1 be reclassified as an improved project in order to relocate it 35 feet closer to the park’s pond and increase its capacity.  The State of Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP or Grantee) approved the request and forwarded it to FEMA on March 28, 2011.[1]

FEMA conducted a site inspection in May 2011 and noted the Applicant completed construction of the project.  FEMA noted the finished structure was not a reconstructed gazebo, but rather was an enclosed boat house, comprised of a boat rental office, concession stand, restrooms, and storage area.  FEMA subsequently advised the Applicant to change its request to an alternate project based on a change in function.  FEMA received the Applicant’s alternate project request (dated September 23, 2011) on October 7, 2011.  On May 21, 2012, the Applicant advised FEMA of its intention to add the bathroom project from PW 14293 to its alternate project request.  FEMA informed the Applicant it would refrain from any further action until it received a formal request from the Applicant.  FEMA received such a request on January 24, 2013.[2]  On June 13, 2014, FEMA denied funding for PW 19500 due to the Applicant initiating and completing construction on the boat house before the Grantee submitted the request for the alternate project to FEMA.  The Applicant appealed the determination on October 3, 2014. 

First Appeal

In its first appeal, the Applicant refuted FEMA’s determination that the Grantee did not submit the improved project request until construction was completed on the boat house.  The Applicant pointed to its original request for an improved project on February 16, 2011, submitted several months before issuing the substantial completion certificate on June 3, 2011.[3]  The Applicant asserted that only after multiple meetings with FEMA and at FEMA’s urging, did it submit an alternate project request on September 23, 2011.[4]

FEMA issued a Final Request for Information on March 13, 2014.[5]  In its response, the Applicant argued that not only did FEMA already have all of the information in hand when the Applicant submitted its request to change the classification to an alternate project, but FEMA’s delay in responding was an undue burden on the Applicant.  The Applicant explained that it moved forward with the project in good faith due to the nature of its working relationship with FEMA, continuously communicating throughout the project, and as such, expected a forthcoming approval.

In a letter dated August 19, 2015, the Region VI Regional Administrator (RA) denied the appeal, determining that the Applicant initiated and completed construction prior to allowing FEMA the opportunity to complete the required environmental and historical preservation (EHP) review.  The RA stated that although the Applicant requested funding as an improved project prior to completing construction, FEMA correctly advised the Applicant to submit an alternate funding request, after it conducted a site visit in May 2011, and observed a completed structure, which had, in fact, changed from a gazebo to an enclosed building, housing a boat rental office, concession stand, restrooms, and storage area. 

The RA pointed to the actions of the Applicant throughout the project, specifically emphasizing that the Applicant not only entered into a Notice of Award with its contractor in January 2011, but also that the contractor initiated construction before March 3, 2011.[6]  The RA noted that FEMA did not receive the Applicant’s improved project request to construct a new facility until March 28, 2011.  Furthermore, the RA stated that while the Applicant is correct that GOHSEP approved its improved project request, GOHSEP also cautioned the Applicant on three separate occasions to comply with the EHP requirements prior to initiating construction.[7] 

Finally, the RA found the Applicant’s claim that “the Parish met all EHP requirements,” lacked documented support, and could not rely on that assertion after construction finished on the boat house.  Ultimately, the RA determined that the Applicant initiated and completed construction without receiving prior approval from FEMA pursuant to 44 C.F.R. § 206.203(d)(2)(v), which also denied FEMA the opportunity to complete a NEPA review.  As such, the RA denied its appeal. 

Second Appeal

In its second appeal, the Applicant requests reconsideration of the first appeal and argues the project was statutorily and categorically excluded (STATEX and CATEX) from EHP review, based on language it cites in PWs 1633 and 19500.  Alternatively, the Applicant argues that the previous EHP clearance(s) done for Torres Park[8] satisfied EHP requirements, as they allowed “FEMA the opportunity to complete” its review of the boat house.[9]  The Applicant further claims that the Grantee approved the improved project request, claiming that this is the correct classification and, as such, the Applicant complied with the requirements in 44 C.F.R § 206.203(d)(1).  Finally, the Applicant argues FEMA tacitly approved the improved project request through its review of documentation and communications with the Applicant during and after construction, as well as through its approval of the Applicant’s time extension.

Analysis

Work Eligibility: Alternate Versus Improved Project

Pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) § 406, FEMA may fund the cost of repairing, restoring, reconstructing, or replacing an eligible facility on the basis of the design of the facility as it existed immediately prior to the major disaster.[10]  FEMA may reimburse costs when an applicant makes improvements, but still restores the predisaster function of a damaged facility.[11]  However, the grantee's approval must be obtained, and federal funding for such improved projects is limited to the Federal share of the approved estimate of eligible costs.[12]  In addition, an improved project “must have the same function…as that of the pre-disaster facility.”[13]  Conversely, if an applicant determines that the public welfare would not be best served by restoring a damaged public facility to its predisaster function, the grantee may request that the RA approve an alternate project.  Prior to the start of construction of any alternate project, the grantee submits to the RA for approval a description of the proposed alternate project, projected associated costs, and assurances that compliance with special requirements, including EHP requirements, were met.[14]

The Applicant argues that FEMA incorrectly classified the project as an alternate project.  The Applicant contends the boat house is actually an improved project because the function of the structure did not change.  It views the pre-disaster gazebo as a recreational facility, which included enclosed restrooms,[15] and maintains the boat house is still a recreational facility with restrooms, only with an increased capacity and location change.  The Applicant offers no further support of its claim that the function did not change.  A google earth view of the boat house, as well as the pictures submitted by the Applicant, confirm it is an enclosed building.  The Applicant’s “Flood Declaration Page” labels the structure as the “Torres Park Boat House.”[16]  A gazebo is defined as “a roofed structure that offers an open view of the surrounding area, typically used for relaxation or entertainment.”[17]  Even though both a gazebo and a boat house may be classified as a “recreational facility,” the two structures do not have the same design, capacity or function as required by the Stafford Act and implementing regulations.  As currently constructed, the boat house’s primary function is for commercial purposes, such as renting boats and selling concessions, in addition to housing a private storage area and public restrooms.[18]  The boat house provides a source of revenue to the Applicant, and there is nothing to suggest the pre-disaster Gazebo #1 housed a boat rental office, received any type of revenue or contained a storage area.[19]  As noted previously, Torres Park contains two other reconstructed gazeboes that are clearly defined gazeboes and thus maintain the same pre-disaster function.  Appropriately, FEMA classified the boat house as an alternate project. 

According to the PA Guide, all requests for alternate projects, “must be approved by FEMA prior to construction.  FEMA must ensure that the proposed project represents an appropriate use of funds and complies with applicable environmental and historic preservation laws.”[20]  Here, the Applicant did not receive FEMA’s approval prior to constructing the new structure in early 2011, nor did it submit its alternate project request until September 23, 2011, months after it completed construction on May 5, 2011.  Therefore it did not meet the requirements set forth in the 44 C.F.R 206.203(d)(2)(v) and the PA Guide. 

Even if, arguendo, the boat house were classified as an improved project, it likewise required approval from FEMA prior to construction.  In its second appeal, the Applicant argues that as an improved project, it complied with the requirements in 44 C.F.R. § 206.203(d)(1) by obtaining the Grantee’s approval.  Yet, here, the changes in scope of work required FEMA’s approval because, as FEMA guidance states, “any improved project that results in a significant change from the pre-disaster configuration (that is, different location, footprint, function, or size) of the facility must also be approved by FEMA prior to construction to ensure completion of the appropriate environmental and/or historic preservation review.”[21]  The location and size of Gazebo #1 changed, yet the Applicant did not obtain FEMA’s approval for the project prior to the start of construction.  As such, the Applicant did not comply with eligibility requirements, and the project is ineligible for PA reimbursement. 

Environmental Compliance and Exclusions

The National Environmental Policy Act (NEPA) sets forth procedures to ensure that agency decision-makers consider the environmental consequences that federal projects and alternatives may have on the environment.  The process must be completed prior to obligating funds and beginning work.[22]  Pursuant to FEMA’s Environmental Policy Memo #3, “[i]t is FEMA policy that actions initiated and/or completed without fulfilling the specific documentation and procedural requirements of [the National Environmental Policy Act (NEPA)] may not be considered for funding.”[23]

The Applicant argues that the project is statutorily excluded from undergoing a NEPA review.  The Stafford Act lists certain statutorily excluded actions from NEPA review and documentation, usually emergency type actions, such as debris removal, or certain permanent work, such as restoring a building to its predisaster condition.[24]  In support of its argument, the Applicant points to PW 1633 Version 5, which states, “[b]ased on information provided by the applicant, the scope of work for this project #1633 version 1 qualifies as a Statutory Exclusion (STATEX) under 44 CFR Part 10.”[25]  The Applicant, however, omits the following sentence, which states that “[a]ny change to the approved scope of work will require resubmission for re-evaluation for compliance with [NEPA].  Non-compliance with this requirement may jeopardize the receipt of federal funding.”[26]  Here, not only did the scope of work change, requiring the Applicant to submit the project for reevaluation, but PW 19500 is an entirely different PW from 1633.  FEMA prepared PW 1633 to address repairs to Torres Park, at large, and PW 19500 to specifically address repairs to Gazebo #1.  FEMA considers the park and Gazebo #1 two different facilities, involving different scopes of work, even though Gazebo #1 is located in the park.  Therefore, the EHP review conducted for PW 1633 does not cover the work addressed in PW 19500 because each PW addressed different scopes of work and each project requires its own EHP review.  Nevertheless, even if Gazebo #1 was not addressed in a separate PW, because the scope of work changed, the Applicant was still required to resubmit the project to FEMA for approval. 

In its second appeal, the Applicant claimed the project is categorically excluded from a NEPA review based on language in PWs 1633 and 19500.  44 C.F.R. Section 10.8, lists certain categorical exclusions, or actions undertaken by FEMA that typically do not result in significant impacts upon the environment and are accordingly excluded from preparation of environmental assessments.[27]  In PW 1633, FEMA limited the categorical exclusions to only: (1) the procurement and storage of goods and services for emergency activities, (2) repairs or reconstruction that comply with current codes and standards, or replacement of facilities that substantially conform to pre-disaster design, and (3) programmatic and categorical exclusions.[28]  This project does not meet any of the excluded categories and accordingly is not excluded from undergoing a NEPA review.

Furthermore, GOHSEP continuously cautioned the Applicant to ensure all FEMA reviews were completed before initiating construction on three separate occasions.[29]  Both FEMA and GOHSEP informed and reminded the Applicant of the EHP requirements. The argument that the Applicant was excused from or unaware of the requirement to obtain FEMA’s approval because of the prior EHP review(s) is without merit.

Prior Communications between FEMA and Applicant

Before FEMA approves a project or obligates any funds for a PW, the request must be sent to the RA for approval, and only the RA has the authority to obligate the funds based on approved PWs.[30]  More specifically, the PA Guide provides that, “FEMA must ensure that the proposed project…complies with applicable environmental and historic preservation laws.”[31]

The Applicant argues that FEMA knew about the construction and gave the Applicant the impression the agency would find it eligible.  The Applicant fails to provide any documentation to support this argument, except the assertion that it and FEMA had “verbal conversations,”[32] indicating “FEMA’s questions about the…project had been resolved.”[33]  There is no basis for FEMA to find that it granted funding for the project through its communications with the Applicant.  The RA never approved the improved project request nor did he approve the alternate project request.  As such, neither FEMA’s alleged delay, nor its communications with the Applicant, amount to an approval of the project. 

The Applicant also argues that FEMA approved its request for a time extension on the project, which consequently gave it the understanding that FEMA had approved the Improved Project request.  The Applicant raises this issue in its second appeal.  However, FEMA does not possess any statutory authority to grant an appeal or grant an improved project request based on a prior grant of a request for a time extension.  They are separate and distinct issues and for that reason, FEMA did not approve the funding for the project or the appeal based on its granting of the time extension.

Finally, the Applicant claims that FEMA had an opportunity to “make the right determination” and was negligent in taking more than three years to deny its request.[34]  However, FEMA did not receive the formal request to include PW 14293 as part of the alternate project until January 2013.  Any delay in FEMA’s determination after that date had no effect on the Applicant’s noncompliance with the grant requirements and in no way could remedy the Applicant’s noncompliance.

Conclusion

Pursuant to Stafford Act § 406(c) and 44 C.F.R. § 206.203(d)(2), the Applicant’s project is an alternate project.  As such, it required FEMA approval prior to commencement.  Moreover, because the scope of work changed, the Applicant was required to undergo an EHP review.  Because FEMA was not notified about the alternate project until it was completed, FEMA was not afforded the opportunity to conduct an EHP compliance reviews.  Therefore, the project is not eligible for PA reimbursement.