Appeal Timeliness – Net Small Project Overrun

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

DisasterFEMA-4086
ApplicantBorough of Atlantic Highlands
Appeal TypeSecond
PA ID#Multiple Project Worksheets
PW ID#025-UEBHG-00
Date Signed2019-03-12T00:00:00

Summary Paragraph

Between October 26 and November 8, 2012, Hurricane Sandy caused damage throughout New Jersey, including Monmouth County, where the Borough of Atlantic Highlands (Applicant) is located.  Hurricane Sandy’s high winds and flooding caused damage to the Applicant’s facilities at the Atlantic Highlands Municipal Harbor, and as a result, FEMA obligated multiple small project worksheets (PWs) for the Applicant.  Years after the small projects were completed, the New Jersey Office of Emergency Management (Grantee) requested that FEMA adjust all of New Jersey’s 541 PWs to reflect actual insurance proceeds.  On August 30, 2017, FEMA Region II e-mailed the Grantee and agreed to adjust the small project PWs that were part of the Municipal Excess Liability Joint Insurance Fund to account for actual insurance proceeds.  FEMA Region II noted that a small project netting or appeal would not be necessary to complete the insurance adjustments; however, FEMA Region II also emphasized that the Applicant could still pursue a small project netting if it chose, but it would have to do so within 60 days of the last small project’s completion.  Region II made the requisite insurance adjustments and notified the Applicant via letter dated March 1, 2018.  Altogether, FEMA adjusted 77 of the Grantee’s 541 small projects, including three related to the Applicant:  PWs 4235, 3871, and 2626.  The Applicant submitted its net small project overrun request in a letter dated March 15, 2018, stating that actual costs of its nine small project PWs exceeded the estimated costs, and requesting reimbursement totaling $143,453.29.  FEMA issued a Final Request for Information, but neither the Applicant nor the Grantee responded.  The Regional Administrator (RA) issued his first appeal decision on July 27, 2018, denying the Applicant’s appeal.  The RA determined that the Applicant’s appeal was untimely, given that the last date of project completion was in October of 2015, and the Applicant had not submitted the appeal until March 15, 2018.  The RA noted that the Applicant had not disputed the insurance adjustments in its appeal, and moreover, would have had the cost overruns regardless of the insurance adjustments.  Accordingly, the RA found that the Applicant should have, but did not, submit the appeal within 60 days of its last project’s completion.  The Applicant submitted its second appeal on August 15, 2018, and the Grantee forwarded it to FEMA Region II on November 16, 2018.  FEMA is denying the appeal because it is untimely.

 

Authorities and Second Appeals

  • Stafford Act § 422.
  • 44 C.F.R. §§ 206.203(c), 206.204(e)(2); 206.205(a).
  • PA Guide, at 109, 114, 140.
  • Toms River Twp. Bd. of Fire Comm’rs #1, FEMA-4086-DR-NJ, at 1; City of Pensacola, FEMA-4177-DR-FL, at 2; Town of Nichols, FEMA-4031-DR-NY, at 5.

 

Headnotes

  • Per 44 C.F.R. § 206.204(e)(2) an applicant may request additional funding for cost overruns in small projects, but only if the actual costs of all small projects significantly exceed the approved estimated costs.  In addition, such a request is considered an appeal in accordance with 44 C.F.R. § 206.206, and an applicant must submit the appeal to the grantee within 60 days of completion of all the applicant’s small projects. 
    • The Applicant did not submit its net small project overrun request within 60 days of completion of all of its small projects, thus, the request was untimely.

 

Conclusion

The Applicant’s net small project overrun is untimely because the Applicant did not submit the request within 60 days of completion of all of its small projects.

Appeal Letter

Colonel Patrick Callahan

Division of State Police

State of New Jersey Office of the Attorney General

P.O. Box 7086

River Rd.

West Trenton, New Jersey 08628

 

Re:     Second Appeal – Borough of Atlantic Highlands, PA ID: 025-UEBHG-00, FEMA-4086-DR-NJ, Multiple Project Worksheets – Appeal Timeliness – Net Small Project Overrun

 

Dear Colonel Callahan:

 

This is in response to a letter from your office dated November 16, 2018, which transmitted the referenced second appeal on behalf of the Borough of Atlantic Highlands (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s denial of $143,453.29 in a net small project overrun (NSPO).

 

As explained in the enclosed analysis, I have determined that the Applicant did not submit its NSPO request within 60 days of completion of all of its small projects.  Accordingly, the request is untimely, and I am denying the appeal.

 

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.
 

Sincerely,

                                                                     /S/

 

 

                                                                        Jonathan Hoyes  

                                                                        Director

                                                                        Public Assistance Division                                                                                   

 

 

Enclosure

 

cc: Thomas Von Essen

      Regional Administrator

      FEMA Region II

Appeal Analysis

Background

 

Between October 26 and November 8, 2012, Hurricane Sandy caused damage throughout New Jersey, including Monmouth County, where the Borough of Atlantic Highlands (Applicant) is located.  Hurricane Sandy’s high winds and flooding caused damage to the Applicant’s Atlantic Highland Municipal Harbor, and as a result, FEMA obligated multiple small project worksheets (PWs) for the Applicant.[1]  Years after the small projects were completed, the New Jersey Office of Emergency Management (Grantee) requested that FEMA adjust all of the State of New Jersey’s 541 small projects to reflect actual insurance proceeds, rather than submitting a net small project overrun (NSPO) request.[2]  On August 30, 2017, FEMA Region II e-mailed the Grantee and agreed to adjust the small PWs that were part of the Municipal Excess Liability Joint Insurance Fund to account for actual insurance proceeds.[3]  FEMA Region II noted that a small project netting or appeal would not be necessary to complete the adjustments; however, FEMA Region II also emphasized that the Applicant could still pursue a small project netting if it chose, but it would have to do so within 60 days of the last small project’s completion.  In addition, the appeal would need to include cost data for all of the Applicant’s small projects.  The Grantee acknowledged the agreement in a response e-mail the same day.[4]  After the Grantee submitted its formal request for the insurance adjustments,[5] FEMA made the requisite insurance adjustments and notified the Grantee via letter dated March 1, 2018.  Altogether, FEMA adjusted 77 of the 541 small projects, including three related to the Applicant: PWs 4235, 3871, and 2626.[6]    

 

First Appeal

 

The Applicant submitted its NSPO request in a letter dated March 15, 2018, stating that actual costs of its nine small project PWs exceeded the estimated costs, totaling $143,453.29.[7]  The Applicant submitted a spreadsheet showing actual incurred costs for each PW, the obligated costs for each PW, and any disputed difference.  In addition, the Applicant submitted a spreadsheet detailing all insurance payments received for the disaster.  Finally, the Applicant stated that all supporting documentation was located on New Jersey’s grant management website.  The Grantee forwarded the Applicant’s appeal in a letter dated March 19, 2018.[8]  The Grantee did not put forth additional arguments or documentation, but it did provide a chart detailing the final obligated amounts from FEMA and the Applicant’s documented actual costs for each PW.  FEMA issued a Final Request for Information (RFI), requesting information that would demonstrate that the Applicant submitted a NSPO request in a timely manner.  Neither the Applicant nor the Grantee responded. 

 

The Regional Administrator (RA) issued his first appeal decision on July 27, 2018, denying the Applicant’s appeal.  The RA determined that the Applicant’s appeal was untimely, given that the last date of project completion was October 11, 2015, and the Applicant had not submitted the appeal until March 15, 2018.[9]  The RA determined that the date of project completion was on or about October 11, 2015,[10] given that the Grantee had granted a time extension request for PW 4235, extending the period of performance to that date.[11]  In addition, the RA noted that the insurance adjustments did not impact the completion of the Applicant’s small projects.[12]  Accordingly, the RA found that the Applicant did not submit the appeal within 60 days of the last project’s completion, as required.[13] 

 

Second Appeal

 

The Applicant submitted its second appeal in a letter dated August 15, 2018, arguing that when FEMA approved the request to adjust awards based on actual insurance proceeds, FEMA in turn “re-opened” the period of performance for each project.[14]  The Applicant claims that its 60-day clock did not begin until FEMA issued its March 1, 2018 letter notifying the Grantee of the insurance adjustments.  In addition, the Applicant argued that its additional incurred administrative costs during the insurance adjustment process also led to an extended period of performance for each PW.  The Applicant cites to Title 2 of the Code of Federal Regulations (2 C.F.R.) § 200.16, which defines “closeout” as “the process by which the Federal awarding agency or pass-through entity determines that all applicable administrative actions and all required work of the Federal award have been completed.”  The Applicant also cites to 2 C.F.R. § 200.77, which defines “period of performance” as “the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.”  Reading these sections together, the Applicant contends that it accrued additional administrative costs during the insurance adjustment process, which the Applicant maintains is a “scope of work” under these sections of the C.F.R.  The Applicant asserts that this in turn “re-opened” the period of performance, and thus, the projects were not complete until FEMA made the insurance adjustments for the small projects.  In a letter dated November 16, 2018, the Grantee forwarded the Applicant’s second appeal letter and supported the appeal, but did not provide additional arguments or documentation.[15] 

 

Discussion

 

FEMA classifies projects as small if approved estimated costs fall below a certain threshold.[16]  If actual costs exceed the approved estimated costs for a small project, FEMA does not review individual small projects on a case-by-case basis.[17]  Instead, an applicant may request additional funding for cost overruns in small projects in a NSPO request, but only if the actual costs of all small projects significantly exceed the approved estimated costs.[18]  In addition, the NSPO request is considered an appeal in accordance with Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.206, and an applicant must submit the appeal to the grantee within 60 days of completion of all the applicant’s small projects.[19]  For small projects, before closeout of the disaster contract, “the Grantee must certify [to FEMA] that all such projects were completed in accordance with FEMA approvals and that the State contribution to the non-Federal share . . . has been paid to [the Applicant].”[20]  If an Applicant submits such an appeal more than 60 days after completing all of its small projects for a given disaster, FEMA considers the appeal untimely.[21]  The applicant has the burden of substantiating its arguments and must explain how documentation supports its appeal, including on the issue of timeliness.[22]

 

The administrative record does not contain a form of certification from the Grantee regarding the completion of all small projects for this disaster.  In fact, other than the letter from the Grantee extending PW 4235’s project completion date to October 11, 2015, there is nothing in the record establishing a later completion date.  Moreover, neither the Grantee nor Applicant dispute that October 11, 2015, was the date of completion of all small projects.  Thus, the Applicant had until December 10, 2015, to submit a net small project overrun via an appeal through the Grantee to FEMA.  Instead, the Applicant did not submit its overrun request until March 15, 2018, after FEMA adjusted all small projects for the State of New Jersey based on actual insurance proceeds.  In this appeal, the Applicant does not dispute the insurance adjustments that FEMA made, but includes overruns for its small projects that it could have requested absent the insurance adjustments.  The Applicant, therefore, should have submitted the request within 60 days of the last small project’s completion.

 

Moreover, the Applicant does not contest that all small projects were complete by October 11, 2015.  Rather, the Applicant argues that because FEMA agreed to make insurance adjustments for each individual small project for the entire state of New Jersey, FEMA also extended the period of project performance for the nine small projects at issue in this appeal.  As additional support for its position, the Applicant states that because it incurred additional administrative costs during the insurance adjustment process, the period of performance for all small projects had to extend as well.  Citing sections 200.16 and 200.77 of Title 2 of the C.F.R., the Applicant argues that because FEMA agreed to “re-open” all of the small projects for insurance adjusting, and because the Applicant incurred additional administrative costs, the time to submit the overrun request by way of appeal did not begin until FEMA finalized insurance adjustments. 

 

This is not the case.  First, Region II stated in the August 30, 2017 email to the Grantee that although an appeal would not be necessary for the insurance adjustments, any overrun requests needed to go through the normal process for small projects.[23]  The email further explained that the requests needed to be submitted within 60 days of project completion and would need to include any relevant cost data as well.[24]  Therefore, Region II did not extend the period of project performance for these small projects, nor did it extend the timeframe for filing a net small project overrun request.  In addition, 2 C.F.R. Part 200 was not in effect at the time of the disaster, as it was not adopted until December 26, 2014.  Thus, the Applicant’s arguments regarding the definitions of “closeout” and “period of performance” are inapplicable.

 

Conclusion

                                 

The Applicant did not submit its net small project overrun request within 60 days of the last small project’s completion, and thus, the appeal is untimely.  Accordingly, the appeal is denied.   

 

[1] PWs 2624, 2626, 3570, 3808, 3871, 4206, 4228, 4235, 4682, 4494, and 4636.

[2] E-mail from Representative, Emergency Mgmt. Section, N.J. Div. of State Police, to Pub. Assistance Branch Chief, FEMA Region II – N.J. Sandy Branch (Mar. 6, 2017, 1734 EST).

[3] E-mail from Pub. Assistance Branch Chief, FEMA Region II – N.J. Sandy Branch, to Representative, Emergency Mgmt. Section, N.J. State Police (Aug. 30, 2017, 0757 EDT). 

[4] E-mail from Representative, Emergency Mgmt. Section, N.J. Div. of State Police, to Pub. Assistance Branch Chief, FEMA Region II – N.J. Sandy Branch (Aug. 30, 2017, 0813 EDT).

[5] Letter from Unit Head, Pub. Assistance, N.J. Div. of State Police, to Pub. Assistance Branch Chief, FEMA Region II, at 1 (Nov. 6, 2017).

[6] FEMA deducted $2,178.06 from PW 3871; deducted $10,589.00 from PW 2626; and obligated an additional $6,779.27 for PW 4235 because the actual insurance proceeds were less than the anticipated insurance proceeds.

[7] Letter from Borough Adm’r, Borough of Atl. Highlands, to Representative, Pub. Assistance Unit, N.J. State Police (Mar. 15, 2018).

[8] Letter from Alternate Governor’s Representative, N.J. Div. of State Police, to Reg’l Adm’r, FEMA Region II, at 1 (Mar. 19, 2018).

[9] First Appeal Analysis, FEMA-4086-DR-NJ, Borough of Atl. Highlands, at 3 (July 27, 2018) [hereinafter First Appeal Analysis].

[10] Id.

[11] Letter from Pub. Assistance Unit Head, N.J. Div. of State Police, to Borough Adm’r, Borough of Atl. Highlands, at 1 (Aug. 29, 2014).

[12] First Appeal Analysis, at 3.

[13] Id.

[14] Letter from Borough Adm’r, Borough of Atl. Highlands, to Representative, Pub. Assistance Unit, N.J. State Police, at 1 (Aug. 15, 2018).

[15] Letter from Governor’s Authorized Representative, State of N.J. Office of Emergency Mgmt., to Assoc. Adm’r Office of Response and Recovery, FEMA, through Reg’l Adm’r, FEMA Region II, at 1 (Nov. 16, 2018).

[16] Robert T. Stafford Disaster Relief and Emergency Act (Stafford Act) § 422, 42 U.S.C. § 5189 (2007); Title 44 Code of Federal Regulations (44 C.F.R.) § 206.203(c) (2012); see also FEMA Second Appeal Analysis, City of Pensacola, FEMA-4177-DR-FL, at 2 (July 27, 2018).

[17] 44 C.F.R. § 206.204(e)(2); Public Assistance Guide, FEMA 322, at 140 (June 2007) [hereinafter PA Guide].

[18] 44 C.F.R. § 206.204(e)(2).

[19] Id.; PA Guide, at 140 (“The appeal must be submitted within 60 days of the completion of all of that applicant’s small projects.  The appeal must include documentation of actual costs including reasons for increased cost of scope of work of all of the projects, including projects with underruns as well as those with overruns.”).

[20] 44 C.F.R. § 206.205(a); see also PA Guide, at 109.

[21] FEMA Second Appeal Analysis, Toms River Twp. Bd. of Fire Comm’rs #1, FEMA-4086-DR-NJ, at 1 (Dec. 7, 2018).

[22] FEMA Second Appeal Analysis, Town of Nichols, FEMA-4031-DR-NY, at 5 (May 10, 2018) (citing FEMA Second Appeal Analysis, Village of Waterford, FEMA-4020-DR-NY, at 4 (Sept. 4, 2014) (an “[a]pplicant has the burden of substantiating its claims . . .”)).

[23] E-mail from Pub. Assistance Branch Chief, FEMA Region II – N.J. Sandy Branch, to Representative, N.J. State Police, Emergency Mgmt. Section (Aug. 30, 2017, 0757 EDT).  

[24] Id.

Last updated