Environmental Compliance - Scope of Work

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	FEMA-1628
Applicant	Reclamation District #800
Appeal Type	Second
PA ID#	067-U8GHO-00
PW ID#	610
Date Signed	2016-03-15T00:00:00

Conclusion: FEMA properly deobligated funding based on the Grantee and Applicant’s noncompliance with permit requirements and the Applicant’s inability to establish that it operated under a valid permit authorization.  Additionally, FEMA properly exercised its discretion by deobligating funding.

Summary Paragraph:

From December 17, 2005 to January 3, 2006, heavy rains caused the Cosumnes River to flood and eroded the river’s levee at four sites.  FEMA prepared Project Worksheet (PW) 610 to repair the levee damage.  Upon environmental and historic preservation review, FEMA conditioned the receipt of PA funding on the Applicant’s implementation of conservation measures under the Endangered Species Act as well as applicable local, state and federal permits and requirements.  While work was underway, the United States Army Corps of Engineers (USACE) issued a cease and desist notice to the Applicant for completing work outside of its NWP 13 authorization period.  A representative from a local tribe also contacted USACE and FEMA to express concern over potential actions taken on sacred tribal lands.  After site inspections confirmed that tribal remains had been disturbed, FEMA deobligated all funding for this project, citing noncompliance with NWP 13 as well as that the work was outside the original scope of work and resulted in the disturbance of tribal remains.  On first appeal, the Applicant asserted that the disturbance was the act of a rogue contractor, was prohibited by the controlling contract, and was not authorized by the Applicant.  The Applicant also stated that it had filed an after-the-fact permit notification to cure the USACE NWP 13 violation.  The FEMA Region IX Regional Administrator denied the appeal, concluding that the Applicant had performed work outside the approved scope of work, violated national environmental policies and the conditions placed on the project, and was responsible for its contractor’s actions.  With submission of the second appeal, the Applicant provided its application to extend the original NWP 13 and requests FEMA consider the financial impacts of deobligating funds.

Authorities and Second Appeals

• 44 C.F.R. § 10.4(a).
• 44 C.F.R. § 206.44.
• 44 C.F.R. § 13.43.
• City of Fort Pierre, FEMA-1984-DR-SD, at 4.

Headnotes

• Pursuant to 44 C.F.R. § 10.4(a) FEMA is required to “act with care to assure that, in carrying out its responsibilities, including disaster planning, response and recovery and hazard mitigation and flood insurance, it does so in a manner consistent with national environmental policies.”
  • The Applicant has failed to comply with the grant requirement to operate under a valid permit at all times, or the measures it agreed to implement to satisfy permit requirements.
• Pursuant to 44 C.F.R. § 206.44, the arrangement between FEMA and a grantee is embodied in the FEMA-State Agreement, which sets forth the understandings, commitments, and conditions for the receipt of PA funding.  Per 44 C.F.R. §13.43 FEMA can take enforcement action in the event that a “grantee or subgrantee materially fails to comply with any term of an award…”
  • The legally binding requirements of the PA grant are embodied in FEMA regulation, the FEMA-State Agreement, and PW 610.  FEMA properly exercised its discretionary authority in deobligating funding.

Appeal Letter

Appeal Analysis

Background

From December 17, 2005 to January 3, 2006, heavy rains caused the Cosumnes River to flood in Reclamation District #800 (Applicant), which is located in southeastern Sacramento County, California.  The resulting high velocity flows and debris caused erosion at four sites along a levee located east of the city of Elk Grove, near the Town of Wilton, in southeastern Sacramento County, California, damaging a total length of 1,100 feet, and eroding approximately 1,691 cubic yards of material.  FEMA initially prepared Project Worksheet (PW) 610 to repair the damage at the four sites and subsequently determined that the sites were ineligible because they were part of a larger Flood Control Work under U.S. Army Corps of Engineers (USACE) authority.  As a result, FEMA processed PW 610 for zero dollars.  The Applicant appealed this determination, submitting a review of the levee design capacity.  FEMA granted the appeal and funded the repair work in the amount of $327,980.00 on March 19, 2007.

In its review of this project, FEMA consulted with the National Marine Fisheries Service (NMFS) in accordance with Section 7 of the Endangered Species Act (ESA).  In response, the NMFS provided twelve avoidance and minimization measures and required that FEMA guarantee implementation in order to protect the federally listed species at the site.[1]  FEMA notified the Applicant of the NMFS requirements in a letter dated April 25, 2008 and requested confirmation that the Applicant would implement these twelve avoidance and minimization measures.  By letter dated May 14, 2008, the Applicant accepted the implementation of twelve avoidance and minimization measures as a condition for project funding under PW 610.[2] 

The USACE authorized project work below the ordinary high water mark that would discharge dredged or fill material in waters of the United States under the Clean Water Act (CWA) Nationwide Permit 13 (NWP 13) – Bank Stabilization.[3]  The authorization for activity at the four sites in PW 610 under NWP 13 was issued on December 16, 2009 for a period of two years and effective until December 16, 2011.[4]  The authorization included a requirement that the Applicant comply with the NMFS requirements described above. 

The Applicant later submitted a request to modify the project scope of work to complete the levee repair work.  The modifications to the original scope of work consisted of increasing the cost associated with each of the original items and adding the following items: clearing and grubbing (under site preparation); erosion control seeding, planting, engineering design, and inspection; and environmental permits and monitoring.  FEMA approved the modified scope of work and obligated an additional $404,102.01 for revised total project funding of $732,082.01 on April 21, 2011.  On May 24, 2011, FEMA found that the changed scope of work did not necessitate additional environmental review.[5]

On September 14, 2012, the USACE issued a cease and desist notice to the Applicant for violating the CWA.  The notice stated that the Applicant operated outside of the NWP 13 authorized timeframe, which ended on December 16, 2011.[6]  A copy of this notice was provided to FEMA. 

On January 13, 2013, the Applicant notified FEMA that its contractor had disposed of debris on private property.  In a subsequent review of the project, FEMA discovered that in addition to the disposal of debris, the Applicant’s contractor had later used heavy equipment to clean up the site, disturbing the ground.  On January 23, 2013, the Wilton Rancheria, a federally recognized tribe, notified FEMA that this site was a sacred tribal burial ground, and that the Applicant’s dumping and subsequent cleanup had disturbed tribal remains.[7]  The site was confirmed to be sacred tribal burial site CA-SAC-113 of the Wilton Rancheria Indian Tribe in a letter from the California Native American Heritage Commission.[8]   

FEMA deobligated all funding for this project, citing the USACE cease and desist notice, the dumping of debris on private property, and the Applicant’s creation of a borrow site on local farm lands as reasons for the deobligation, and notified the California Governor’s Office of Emergency Services (Grantee) in a letter dated April 4, 2013.

First Appeal

The Applicant appealed FEMA’s determination to deobligated project funding in a letter dated June 14, 2013.  The Applicant argued: (1) PW 610, as written, did not specify where soil was to be purchased, and that it had not created a borrow site to obtain soil; (2) the scope of work in PW 610 did not specify disposal of cleared and grubbed material, but if it had, it is unlikely that an environmental review would have shown significant environmental impact requiring mitigation measures; (3) all reasonable steps were taken to prevent the unauthorized disposal of debris by the contractor and the Applicant should not be held accountable for the contractor’s actions, which involved commission of trespass; (4) that the Applicant had obtained all necessary permits for the project, and the contractor had implemented every mitigation measure required under the permits for this project; and (5) the Applicant filed an after-the-fact permit notification to extend the original CWA NWP 13 authorization.[9]

By letter dated August 15, 2013, the Grantee transmitted the Applicant’s appeal to FEMA Region IX.  The Grantee concurred with the Applicant and recommended FEMA’s approval of the repair work documented in PW 610.

The FEMA Region IX Regional Administrator (RA) denied the first appeal in a letter dated April 1, 2014.  The RA explained that FEMA is required to ensure that its responsibilities are performed in a manner consistent with national environmental policies, and that the Applicant has acknowledged that the actions taken by its contractor violate the Avoidance and Minimization Measures to which they agreed to implement by letter dated May 14, 2008.[10]  Specifically, the RA cited three reasons for the denial.  First, the actual work performed, including the illegal dumping and excavation of land away from the levee “constitute[d] unapproved changes to the approved scope of work.”[11]  Second, that this work performed outside of the approved scope of work violated national environmental policies and the conditions placed on the project.  Finally, the Applicant was “accountable for the actions of [its] contractors and agents during the performance of FEMA funded activities,”[12] which in this case included the failure to renew its authorization to work under NWP 13 as well as the dumping and subsequent excavation on sacred tribal lands.

Second Appeal

The Applicant submitted a second appeal in a letter dated June 22, 2014.  The Applicant incorporates, by reference, the documentation included in the first appeal, and makes four assertions on second appeal.  First, the Applicant includes an email from the USACE which indicates that the work performed outside of the original CWA NWP 13 authorization qualifies for authorization pending tribal coordination and consultation with the State Historic Preservation Office.  The Applicant highlights the fact that, of the four sites at which work was performed under PW 610, only work at two of the sites occurred after the expiration of their original CWA NWP 13 authorization, and states that two sites are not within the USACE’s area of potential effect.  The Applicant then asserts that, based on its reading of this email, the USACE intends to issue an after the fact permit.  Second, the Applicant requests that FEMA consider the financial impacts of deobligating all project funding, as the majority of its operating budget is raised by individual landowners who rely on the levees to keep their homes and property safe in flood events and the impact of this deobligation would be disproportionate to FEMA’s basis for deobligation.  This impact, the Applicant argues, may result in decreased funding for regular maintenance and could increase future risk of flooding.  Third, the Applicant argues that “upholding the commitment of funds is consistent with the Stafford Act’s purpose to make emergency assistance funds available for appropriate projects” and that FEMA has discretionary authority to suspend or terminate an award of funding.[13]  The Applicant states that denying this appeal does not advance any policy interest or set a precedent for other Applicants because the denial is based on the actions of a rogue contractor.  The Applicant cites a letter from the impacted tribe which shows that the tribe supports FEMA’s funding of the work, and uses this to support its argument that FEMA use its discretion in granting this appeal.[14]  Finally, the Applicant argues that it had expended significant resources to ensure that all permits were obtained, and that no work was done without a permit. 

In a letter dated August 12, 2014, the Grantee transmitted the Applicant’s second appeal to FEMA.  The Grantee concurred with the Applicant and attached a copy of the email communication between the Applicant and the USACE regarding the Applicant’s CWA NWP 13 authorization.[15]

Discussion

On second appeal, the Applicant raises three issues for consideration: (1) whether the NWP 13 authorization lapse, regardless of the Applicant’s after-the-fact effort to cure this lapse as supported by the USACE email included by the Applicant on second appeal, constituted noncompliance with grant terms; (2) whether the Applicant should be held responsible for the actions of its contractor that were performed outside the contract and if so, whether such actions constituted noncompliance with grant terms; and (3) a request for FEMA to exercise its discretionary enforcement authority to award the funding despite violation of the grant conditions.

Compliance with Grant Terms: Permit Requirements

The Applicant acknowledges that its authorization under NWP 13 lapsed prior to work being complete on the project.[16]  On second appeal, however, the Applicant presents an email from the USACE stating its intent to grant an after-the-fact authorization to the Applicant pending tribal coordination and consultation with the State Historic Preservation Office (SHPO) regarding compliance with Section 106 of the National Historic Preservation Act (NHPA).[17]

Pursuant to Title 44 Code of Federal Regulations (44 C.F.R.) Section 10.4(a) FEMA is required to “act with care to assure that, in carrying out its responsibilities…it does so in a manner consistent with national environmental policies.”[18]  As such, FEMA must complete reviews of project work for compliance with applicable federal laws, regulations, and executive orders (EOs) “before FEMA approves funding and before work is started since [it] may identify steps to be taken or conditions to be met before the project can be implemented.”[19]  In projects where dredged material or fill is discharged into the waters of the United States as part of a project, USACE is consulted.[20]  Section 404 of the CWA gives the USACE authority to issue permits authorizing this type of activity.[21]

The Applicant has not provided evidence demonstrating that it complied with the grant requirement to operate under a valid permit at all times.  PW 610 explicitly conditions PA funding on the Applicant complying with all local, state and federal permits and requirements.[22]  It is not enough to acquire a permit.  The Applicant must ensure that each permit is current and valid throughout performance of the eligible work.  The Applicant avers that it filed an after-the-fact application to cure the expired permit/authorization.  The Applicant relies on an email from the USACE stating the agency’s intent to authorize the work.  Specifically, the Applicant cites the USACEs findings that (1) work at only two sites was completed after the expiration of the authorization, (2) the tribal site impacted by work performed at the sites after the authorization had expired is out of the USACEs area of potential effect, and (3) the permit authorization is pending only tribal coordination and NHPA review before it can be finalized.  This email is insufficient to demonstrate that the Applicant complied with grant requirements; nor does it grant authorization going forward or retroactively.  The email only serves as proof that the Applicant is in the process of obtaining an after-the-fact authorization from the USACE, but has no bearing on the fact that the Applicant operated outside of its original authorization under NWP 13.[23]  Further, the Applicant has not established that the USACE granted authorization.  Therefore, the RA correctly determined that the Applicant operated outside the permit requirements and failed to comply with the specific grant conditions. 

Compliance with Grant Terms: Contractor Actions

The Applicant argues on second appeal that it should not be held responsible for the actions of its contractor, stating that this action was “prohibited by the controlling contract, no one associated with [the Applicant] authorized dumping at this location, and the dumping involved illegal trespass against one of the District’s [Applicant’s] landowners.”[24]  However, FEMA regulation specifies that the grantee is accountable for the use of all PA funds; [25] and applicants are accountable to the grantee for the proper use of those funds.[26]  The grantee is primarily responsible for monitoring “grant and subgrant supported activities to assure compliance with applicable Federal requirements.”[27]  The arrangement between FEMA and a grantee is embodied in the FEMA-State Agreement, which sets forth the understandings, commitments, and conditions for the receipt of PA funding and imposes binding obligations on FEMA, the grantee, and applicants that are legally enforceable.[28]  FEMA may take an enforcement action in the event that a “grantee or [applicant] materially fails to comply with any term of an award, whether stated in a Federal statute or regulation, an assurance, in a State plan or application, a notice of award, or elsewhere.”[29]

The legally binding requirements of the PA grant are embodied in FEMA regulation, the FEMA-State Agreement, PW 610, and associated correspondence.  Specifically PW 610 conditions PA funding on compliance with all local, state and federal permits and requirements and in a letter dated May 14, 2008, the Applicant agreed to implement twelve avoidance and minimization measures as a condition for PA funding.  The Applicant violated measure 12 when its contractor dumped and subsequently cleaned up, with heavy machinery, debris on sacred tribal land.  The Grantee and Applicant are accountable to FEMA for failure to comply with the terms of the grant.  In violating the avoidance and minimization measures, the Grantee and Applicant failed to comply with these two conditions; therefore, FEMA correctly deobligated funding for noncompliance by the Applicant.[30] 

FEMA’s Discretionary Authority

The Applicant asserts that FEMA should have used its discretion to grant funding, as allowed by the regulations.  FEMA is authorized by 44 C.F.R. § 13.21(g) to withhold payment where an applicant fails to comply with the terms of a grant.  Section 13.43(a) provides FEMA with a number of enforcement remedies including “wholly suspend[ing] or terminat[ing] the current award for the grantee’s or [applicant]’s program.”[31]  FEMA exercises this discretionary authority on a case by case basis, often balancing the competing interests of supporting the community’s recovery efforts despite mistakes in executing the grant with the importance of ensuring grantees and applicants properly perform their roles in ensuring federal funds are spent in accordance with the terms of the grant.  The Applicant acknowledges that the NWP 13 authorization had expired, the contractor clearly violated the terms of the grant and tribal burial grounds were disturbed as a result of the work performed.[32]  In light of the egregious nature of the harmful actions in this case, FEMA is not persuaded to support the award of PA funds in the face of clear violations of permit requirements and the FEMA approved scope of work.  As such, FEMA properly exercised its discretionary enforcement authority to deobligate project funding.   

Conclusion

FEMA properly deobligated funding based on the Grantee’s and Applicant’s noncompliance with permit requirements and the Applicant’s inability to establish that it operated under a valid permit.  The fact that the USACE was considering approving a permit extension does not change that outcome as the permit remained expired.  As such, FEMA properly exercised its discretion by deobligating funding, as nothing in the regulations or the Stafford Act supports otherwise.  The second appeal is therefore, denied.

 

[1] Letter from Reg’l Adm’r, Nat’l Marine Fisheries Serv. Sw. Region, to Envtl. Officer, FEMA Region IX (Dec. 4, 2007).

[2] Letter from Eng’r, Dist. Agent, Reclamation Dist. #800, to Dir., FEMA Region IX Response and Recovery Div. (May 14, 2008).

[3] Federal Water Pollution Control Act, § 404, 33 U.S.C. § 1344 (2002) (commonly known as the Clean Water Act, section 404 delegates authority to the USACE for administering permits for the discharge of dredged or fill material into the navigable waters at specified disposal sites).

[4] Letter from Senior Project Manager, Cal. Delta Branch, Regulatory Div., U.S. Army Eng’r Dist., Sacramento, Corps of Engineers, to Reclamation Dist. #800 (Dec. 16, 2009).

[5] Project Worksheet 610, Reclamation Dist. #800, Version 1 (2007).

[6] Letter from Chief, Cal. Delta Branch, U.S. Army Eng’r Dist., Sacramento, Corps of Engineers to Reclamation Dist. #800 (Sept. 14, 2012).

[7] Email from Representative, Wilton Rancheria to Reg’l Envtl. Officer, FEMA Region IX (Jan. 23, 2013, 03:16 PM)

[8] Letter from Envtl. Specialist, Cal. Native Am. Heritage Comm’n, to Representative, Wilton Rancheria Indian Tribe (May 13, 2013).

[9] Memorandum from Reclamation Dist. #800 on Appeal of Decision, to Governor’s Authorized Representative, Cal. Governor’s Office of Emergency Services, at 2-7 (June 14, 2013).

[10] Letter from Eng’r, Dist. Agent, Reclamation Dist. #800, to Dir., Response and Recovery Div., FEMA Region IX (May 14, 2008).

[11] FEMA First Appeal Analysis, Reclamation Dist. #800, FEMA-1628-DR-CA, at 4 (April 1, 2014).

[12] Id.

[13] Letter from President, Reclamation District #800, to State Public Assistance Officer, Cal. Governor’s Office of Emergency Services, at 3 (June 22, 2014). [hereinafter Second Appeal Letter].

[14] Letter from Chairman, Wilton Rancheria, to Infrastructure Branch Chief, Recovery Div., FEMA Region IX (June 10, 2013).

[15] Email from Senior Project Manager, Cal. South Branch, USACE, to Eng’r, Dist. Agent, Reclamation Dist. #800 (June 19, 2014 09:18 AM).

[16] Second Appeal Letter, at 1.

[17] Email from Senior Project Manager, Cal. South Branch, USACE to Eng’r, Dist. Agent, Reclamation Dist. #800 (June 19, 2014, 09:18 AM)

[18] 44 C.F.R. § 10.4(a) (2005).

[19] Public Assistance Guide, FEMA 322, at 128 (June 2007) (emphasis added).

[20] Id. at 132.

[21] Federal Water Pollution Control Act, § 404.

[22] Project Worksheet 610, Reclamation Dist. #800, Version 1, at Standard Conditions (2007)

[23] As of the issuance of this appeal the status of the Applicant’s after the fact authorization remained unchanged from the status reflected in the documentation provided by the Applicant.

[24] Second Appeal Letter, at 1.

[25] 44 C.F.R. § 206.201(e).

[26] 44 C.F.R. § 206.201(o).

[27] 44 C.F.R. § 13.40(a).

[28] 44 C.F.R. § 206.44.

[29] 44 C.F.R. § 13.43.

[30] Note that 44 C.F.R. § 13.36(i)(1) requires applicants to include contract provisions that provide administrative, contractual, and legal remedies in the event a contractor violates or breaches terms of the contract.

[31] 44 C.F.R. § 13.43(a)(3).

[32] Second Appeal Letter, at 1.