Debris Disposal and Monitoring – Allowable Costs and Reasonable Costs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	4166
Applicant	South Carolina Department of Transportation
Appeal Type	Second
PA ID#	000-URFSC-00
PW ID#	PW 453
Date Signed	2020-04-13T00:00:00

Summary Paragraph

Between February 10 and 14, 2014, a severe winter storm deposited debris onto roads and rights-of-way (ROW) owned and maintained by the Applicant, creating an immediate threat to life, public health and safety.  FEMA prepared Project Worksheet (PW) 453 to cover costs for debris monitoring work performed during the 91-180 day time frame from May 11 to August 8, 2014 under the Public Assistance (PA) Alternate Procedures Pilot Program for Debris Removal (Pilot Program) and awarded $295,670.18 in estimated costs.  The Applicant submitted a Final Inspection Report (FIR) with claimed costs totalling $3,127,466.15.  FEMA denied the request for additional funding, determining that the scope of work related to the $2,831,795.97 was ineligible for PA funding.  The Applicant appealed, arguing costs for verification work performed during the 91-180 day time frame and beyond are eligible, the contractor’s data collection system was acceptable under FEMA’s program, and costs were necessary and reasonable.  The FEMA Region IV Regional Administrator denied the appeal, noting that PWs 425 and 442 reimbursed costs accrued during the first 90 days of debris removal, the subsequent monitoring work was duplicative, and that the appealed costs do not meet the reasonableness standard established by federal grant regulations as they resulted from inadequate recordkeeping.  The Applicant’s second appeal reiterates prior argument.

 

Authorities and Second Appeals

• Stafford Act § 428(e)(2).
• 2 C.F.R. § 200.403(a), 200.404. (2014)
• Public Assistance Alternative Procedures Pilot Program Guide for Debris Removal, at 4.
• Public Assistance Debris Management Guide, FEMA 325, at 105. 

Headnotes

• Per 2 C.F.R. § 200.403(a), costs must be reasonable and necessary for the performance of the federal award. According to 2 C.F.R. § 200.404, a cost is considered reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.
  • Monitoring costs for the first 90 days of debris removal operations were properly reimbursed, and FEMA will not reimburse costs incurred beyond those 90 days resulting from its deficient recordkeeping, as they were not reasonable and necessary for the performance of the federal award.

Conclusion

Debris monitoring costs for the first 90 days were properly reimbursed in other PWs.  FEMA will not reimburse costs incurred beyond those 90 days resulting from its deficient recordkeeping, as they were not reasonable and necessary for the performance of the federal award.  The appeal is denied.

 

Appeal Letter

Appeal Analysis

Background

 

Between February 10 and 14, 2014, a severe winter storm deposited debris onto roads and rights-of-way (ROW) owned and maintained by the South Carolina Department of Transportation (Applicant), creating an immediate threat to life, public health and safety.  FEMA prepared Project Worksheet (PW) 453 to cover the Applicant’s costs for work performed to monitor debris removal operations during the 91-180 day time frame from May 11 to August 8, 2014 under the Public Assistance (PA) Alternative Procedures Pilot Program for Debris Removal (Pilot Program), and awarded $295,670.18 in estimated costs.  The Applicant submitted a Final Inspection Report (FIR) for PW 453 on July 6, 2016 for total debris monitoring costs claimed of $3,127,466.15 associated with 10 debris removal PWs during the 91-180 day time frame.  FEMA denied the request for additional funding on November 16, 2018.  FEMA stated that, during the initial request, it was noted that the Applicant did not incur any costs for Leaner/Hanger (L/H) (i.e., hazardous trees) removal operations during the 91-180 day time frame and, as such, its contractor could not have been monitoring eligible L/H work during that timeframe.  During its initial review, FEMA noted multiple discrepencies in the debris monitoring records that required the Applicant to reassess areas and provide accurate information before funding could be approved, and to the extent that any L/H monitoring costs are related to additional work to doeument eligibility of L/H removal operations from 0 to 90 days, they would duplicate monitoring costs already funded in separate PWs for that period.

 

First Appeal

 

The Applicant appealed by letter dated January 14, 2019 for $2,831,795.97, stating that although the contractors performed the debris removal within the first 90 day period, the costs submitted were for verification work performed during the 91-180 day time frame (and beyond), which are eligible.  The Applicant argued the contractor’s data collection system (which involved the use of hand-held clipboards, paper tickets and pictures) delayed invoices but was acceptable under FEMA’s program.  It further stated that an automatic system was not required, and that costs were necessary and reasonable.  The South Carolina Emergency Management Division (Grantee) supported the Applicant’s appeal by letter dated January 30, 2019. 

 

By letter dated November 5, 2019, the FEMA Region IV Regional Administrator denied the appeal.  FEMA noted that PWs 425 and 442 reimbursed monitoring costs accrued during the first 90 days of debris removal and, as no additional debris removal work took place after the initial 90 days, it appeared subsequent monitoring work was duplicative.  FEMA also noted the appealed costs do not meet the reasonableness standard established by federal grant regulations, as they resulted from inadequate recordkeeping, which caused the Applicant’s contractor to spend an inordinate amount of time and effort to reconcile documentation for work performed during the initial 90 days.

 

Second Appeal

 

The Applicant’s January 3, 2020 second appeal reiterates and expands on previous arguments.  The Grantee supports the Applicant’s appeal by a letter dated January 21, 2020.

 

Discussion

 

Debris Disposal and Monitoring

 

Section 428 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) authorizes funding for eligible debris removal activities under FEMA’s Pilot Program, which allows an applicant to opt for an increased federal cost share for accelerated completion of debris removal, reimbursement of forced account labor, and retention of recycling income generated from recycling debris removal.[1]  Under the Pilot Program, debris removal costs are reimbursed in the following stages:[2]

 

Debris Removal Completed (Days from Start of Incident Period)	Federal Cost Share
0 – 30	85%
31 – 90	80%
91 – 180	75%

 

Applicants should establish debris monitoring procedures and include them in the debris management plan for the applicant’s financial interest, especially if the applicant has contracted for any component of the debris removal operation.[3]  Failure to document eligible work and costs may jeopardize PA grants.[4] 

 

When the Applcant elected to participate in the Pilot Program, it agreed that any work done after 180 days would be ineligible.  The RA correctly determined monitoring costs for the first 90 days were properly reimbursed.  The FIRs for PWs 425 and 442 both stated costs were based on actual costs for the disaster and there were no additional items to be claimed.  The PWs indicated ROW and L/H data were compiled and reconciled with the debris contractor's invoices to ensure the Applicant was invoiced only for documented work along the ROWs located in each designated county.  The record shows monitoring work was completed with each stage of debris removal; any subsequent monitoring work duplicates work already documented and reimbursed in PWs 425 and 442.

 

Allowable Costs and Reasonable Costs

Costs must be reasonable and necessary for the performance of the Federal award.[5]  A cost is considered reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.[6]

 

The Applicant argues while the contractor’s data collection system involving use of hand-held clipboards, paper tickets, and pictures delayed invoices, it was acceptable under FEMA’s program, and; that use of an automatic system was not required, and so costs were necessary and reasonable.  However, the record keeping method employed by the Applicant, though allowed, was not performed efficiently, and so the Applicant duplicated debris monitoring work, which FEMA will not reimburse costs for.  As noted above, monitoring costs for the first 90 days were properly reimbursed; and it is unreasonable for FEMA to reimburse for additional costs resulting from deficient recordkeeping.

 

Conclusion

 

Debris monitoring costs for work performed during the first 90 days were properly reimbursed.  FEMA will not reimburse costs incurred beyond those 90 days resulting from its deficient recordkeeping, as they were not reasonable and necessary for the performance of the federal award.  Therefore, the appeal is denied.

 

[1] Stafford Act § 428(e)(2), 42 U.S.C. § 5189f(e)(2) (2013).

[2] Public Assistance Alternative Procedures Pilot Program Guide for Debris Removal, at 4 (June 28, 2013).

[3] Public Assistance Debris Management Guide, FEMA 325, at 105 (July 2007). 

[4] Id.

[5] Title 2 of the Code of Federal Regulations (2 C.F.R) § 200.403(a) (2014).

[6] Id. § 200.404.