Legal Responsibility

Appeal Brief

Appeal Letter

Appeal Analysis

Background

Hurricane Fiona caused damage throughout Puerto Rico from September 17 through 21, 2022.[1] The Municipality of Ponce (Applicant) sought Public Assistance (PA) funding for repairs to the Legrand Building (Facility), a property located in the Port of Ponce (Port). FEMA developed Grants Manager Project (GMP) 714715 for the Applicant to repair the Facility for an estimated cost of $4,465.40. On September 13, 2023, the Government of Puerto Rico Central Office for Recovery, Reconstruction, and Resiliency (Recipient) requested, on behalf of the Ponce Port Authority (PPA), that FEMA transfer the damage repairs in GMP 714715 from the Applicant to the PPA. To support its request, the Recipient provided a Memorandum of Understanding (MOU), dated September 1, 2023, stating that under a local law the Applicant was required to transfer all its real estate properties at the Port to the PPA; and a letter from the PPA, dated September 7, 2023, that confirmed acceptance of the transfer of the project from the Applicant. On September 22, 2023, FEMA denied the request, finding that the PPA was not legally responsible for the Facility repairs at the time of the disaster.

First Appeal

On November 8, 2023, the PPA appealed, citing local laws, and providing MOUs and lease agreements to support its claim that it was legally responsible for the Facility.[2] The PPA stated that, on December 12, 2011, Local Law 240 (LL 240) created the PPAto administer and maintain the Port and directed the transfer of the Port assets to the PPA within 10 years. The PPA stated that, in compliance with LL 240, steps have been taken during the last 18-24 months for the transfer of the title of the Facility to the PPA. The PPA also claimed that MOUs signed between the PPA and the owner of the Facility made the PPA legally responsible to represent, request, pursue, obtain, and manage federal assistance funds for all properties in the process of being transferred to the PPA, including the Facility at issue.[3] Finally, the PPA stated that, prior to the disaster, it had leased the Facility to a third party, and claimed the lease required that the Lessee maintain an insurance policy, which had to insure the PPA against any claims raised for personal or property damage. The PPA claimed that the fact it could be held liable for any incident in the Facility indicated that it was legally responsible for the Facility. In a letter dated January 9, 2024, the Recipient forwarded the appeal to FEMA with its support. 

On March 21, 2024, FEMA sent a Request for Information (RFI) to the PPA, requesting additional documentation to support its claim of legal responsibility for the Facility, and documentation related to insurance coverage for the Facility. On April 19, 2024, the PPA responded to FEMA’s RFI, reiterating the information previously provided. The PPA also provided a certificate of insurance, which identified the Lessee of the Facility as the insured party. The insurance documentation provided by the PPA related to general liability, automobile liability, and employer’s liability, but not insurance concerning potential disaster-related damage to the Facility.

On July 11, 2024, the FEMA Region 2 Regional Administrator denied the appeal. FEMA stated that, neither the PPA nor the Applicant provided adequate documentation to establish the PPA was legally responsible for the Facility repairs. FEMA found that the process of transferring ownership of the properties, as prescribed in LL 240, was ongoing, and the MOUs did not establish that the PPA was legally responsible for Facility repairs at the time of the declared disaster. FEMA further stated that the leases provided with the appeal did not establish that the PPA owned the Facility or was legally responsible for disaster repairs.

Second Appeal

In a letter dated September 6, 2024, the PPA submitted its second appeal.[4] The PPA reiterates prior arguments regarding its legal authority for repairs of the Facility based on LL 240 and the previously provided MOUs and leases. The PPA refers to two previous FEMA second appeal decisions and argues that, in one of the appeals, FEMA found the appellant had legal responsibility for a property based on a claim of usufruct as established in written agreements.[5] For the other second appeal decision, the PPA argues that FEMA held that documentation demonstrating insurance of a property indicates legal responsibility.[6] The PPA asserts that the prior FEMA appeal decisions support its argument that it is legally responsible for the maintenance and repairs of the Facility based on the written agreements provided. In addition, the PPA states that the process of transferring ownership of certain properties has been completed, highlighting the intent of LL 240 that the PPA be considered the owner of all the properties that comprise the Port. The Recipient forwarded the appeal to FEMA with its support in a letter dated November 1, 2024. 

Discussion

FEMA may provide funding to a local government for the repair of a public facility damaged by a major disaster.^[7] To be eligible for funding, work must be the legal responsibility of the applicant requesting assistance.[8] To determine legal responsibility for permanent work, FEMA evaluates whether the applicant claiming the costs had legal responsibility for disaster-related restoration of the facility at the time of the incident based on ownership and the terms of any written agreements.^[9] To determine ownership, FEMA may review deeds, title documents, and local government tax records.^[10] In the case of a leased facility, FEMA reviews the lease agreement to determine legal responsibility for repairs of damage caused by the incident.[11]

Here, the PPA claims it was legally responsible for the Facility at the time of the disaster based on LL 240, MOUs, and lease agreements. LL 240 laid the groundwork for the transfer of the Facility to the PPA. However, this process was not completed at the time of the disaster, and as a result, the PPA did not own the Facility. 

Since legal responsibility was not established based on ownership of the Facility, FEMA considers whether there are any written agreements establishing legal responsibility at the time of the incident for repairs to the Facility. The PPA provided multiple MOUs for FEMA’s consideration, claiming they show the PPA’s responsibility to repair the event related damages. However, only one of the MOUs was executed prior to the disaster and it was not between the PPA and the Applicant. Additionally, the MOU did not recognize the PPA’s responsibility to repair the disaster-related damages.

Similarly, the PPA does not provide other written agreements that establish that PPA was legally responsible for the disaster repairs. While insurance of a facility may help indicate legal responsibility, the PPA did not provide insurance documentation that named it as the insured for disaster-related repairs or any property damage repairs to the Facility. Additionally, the lease agreement states that: “It shall be the Lessee’s responsibility to keep the leased property insured for its replacement value at all times against the risk of fire, earthquake, and hurricane.”^[12] The lease agreement appears to be silent on specific responsibility for disaster repairs, but states that: “…without constituting an obligation of the Lessor, the Lessor, reserves the right to make any repairs or improvements to the leased property during the term of the lease, if deemed appropriate and necessary.”^[13] As a result, although the PPA, as the Lessor, may have had the right to make repairs, it was not legally responsible to do so at the time of the declared incident.

Finally, the PPA contends that FEMA’s second appeal analysis for Asociacion Frailes Capuchinos, Inc. supports its argument that it is legally responsible for the maintenance and repairs of the Facility based on its use of the facilities. However, the facts in this current appeal are distinguishable from Asociacion Frailes Capuchinos, Inc. because, in that appeal, the applicant had occupied the facility without interruption for 70 years since its construction, the facility had no known prior legal owners registered with the government, and there were no other legal owners since the applicant took possession of the Facility.^[14] In that case, there was no documentation to suggest that another entity owned or was responsible for the facility. Here, in contrast, ownership of the Facility at the time of the disaster is not disputed. While steps had been taken to transfer ownership of the Facility, at the time of the disaster, an entity other than the PPA was the legal owner of the Facility. Likewise, based on the facts involved, the Applicant’s reference to FEMA’s second appeal analysis for City of Belle Plaine is not applicable to this current appeal.[15] 

Based on the Applicant’s submitted documentation, the PPA did not own the Facility at the time of the incident and did not demonstrate through the terms of any written agreements that it was legally responsible for the requested repairs at the time of the incident.^[16]

Conclusion

The PPA did not have legal responsibility for the requested repairs at the time of the disaster. Therefore, this appeal is denied.