Legal Responsibility

Appeal Brief

Summary Paragraph

From September 17-21, 2022, Hurricane Fiona impacted Puerto Rico. The Autoridad de los Puertos de Ponce (Applicant) requested $46,176.93 in Public Assistance (PA) to repair the Port Administrative Building (Facility), located in the Port of Ponce (Port). FEMA denied the request, finding that, at the time of the disaster, the Applicant was not legally responsible for the repairs. The Applicant appealed, arguing that its legal responsibility stemmed from Local Law 240 (LL 240), which directed the transfer of all Port-related assets to the Applicant. The Applicant provided certificates of property transfers for Port-related assets, a lease agreement, and memorandums of understanding, which it claimed supported its legal responsibility for the requested repairs. The FEMA Region 2 Regional Administrator denied the appeal, finding that the documentation provided by the Applicant did not establish that it was legally responsible to repair the Facility at the time of the disaster. The Applicant submits a second appeal, reiterating prior arguments.

Authorities

• Stafford Act § 406(a)(1)(A), 42 U.S.C. § 5172(a)(1)(A).
• 44 C.F.R. § 206.223(a)(3).
• PAPPG, at 52-53.

Headnotes

• To be eligible for PA funding, work must be the legal responsibility of the applicant requesting assistance. 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.
  • The transfer of assets directed by LL 240 was not complete at the time of the disaster. Therefore, legal responsibility is not established based on ownership of the Facility.
  • The Applicant has not provided documentation enabling FEMA to determine whether the Applicant was legally responsible for repair costs under the terms of the lease agreement, and did not provide other written agreements that establish it was legally responsible for the disaster repairs.

Conclusion

FEMA finds that the Applicant has not demonstrated it had legal responsibility for the requested repairs at the time of the disaster. Therefore, this appeal is denied.

Appeal Letter

Appeal Analysis

Background

Hurricane Fiona caused damage throughout Puerto Rico from September 17 through 21, 2022.[1] The Autoridad de los Puertos de Ponce (Applicant) sought $46,176.93 in Public Assistance (PA) for permanent repairs to a Port Administrative Building (Facility) located in the Port of Ponce (Port). The Applicant referenced Local Law 240 of the Port of Ponce Authority (LL 240), enacted on December 12, 2011, which established the Applicant as an autonomous government entity and directed the transfer of Port-related assets to the Applicant within 10 years. The administrative record shows that the Facility fell under the jurisdiction of the Municipality of Ponce at the time of the declared disaster, and the transfer of ownership to the Applicant was still in progress. The Applicant submitted inspection reports and Memorandums of Understanding (MOUs), including an MOU signed September 1, 2023 (post-disaster), in which the Municipality of Ponce designated the Applicant as its agent, to act on its behalf and be the only and exclusive party with legal authority to represent, request, pursue, obtain, and manage federal assistance funds administered by FEMA related to the declared disaster. On February 1, 2024, FEMA denied the Applicant’s request for funding permanent repairs to the Facility, finding that the Applicant was not legally responsible to repair the Facility at the time of the disaster.

First Appeal

On March 18, 2024, the Applicant appealed, asserting it had legal responsibility for maintaining and repairing the Facility under public laws and per multiple MOUs signed by it and the Puerto Rico Department of Economic Development and Commerce (DEDC), and the Municipality of Ponce. The Applicant reiterated the LL 240 directed the transfer of the Port-related assets to the Applicant within 10 years. The Applicant noted that, although the transfer was not complete at the time of the disaster, the signed MOUs legally obligated the Applicant to represent, request, pursue, obtain, and manage federal assistance funds for all properties in the process of being transferred, including the Facility at issue.[2] Further, the Applicant asserted that it had legal responsibility for the Facility at the time of the disaster because it was required by regulation to collect harbor maintenance fees and tariffs.[3] Additionally, the Applicant provided a lease agreement dated November 12, 2020, in which the Ponce Authority, a predecessor of the Applicant, leased the Facility to the Applicant.

In a letter dated May 11, 2024, the Government of Puerto Rico Central Office for Recovery, Reconstruction, and Resiliency (Recipient) forwarded the appeal to FEMA with its support. The Recipient reiterated the Applicant’s appeal arguments and asserted that the lease agreement demonstrates the Applicant was legally responsible for the Facility.

On July 9, 2024, FEMA issued a Request for Information (RFI) seeking documentation that demonstrated the Applicant: (1) was legally responsibility for the Facility;[4] (2) maintained insurance on the Facility; and (3) renewed or extended the lease agreement. FEMA noted that the lease agreement stated that the Ponce Authority, not the Applicant, was responsible for repairing or rebuilding the Facility, but that the Applicant was responsible for paying any deductible or repair cost in excess of any insurance proceeds received. FEMA requested documentation of any insurance settlement related to the repair of disaster-caused damage, including the amount of repair costs not covered by insurance proceeds.

The Applicant responded to the RFI on August 7, 2024, reiterating statements from its first appeal letter. Additionally, the Applicant provided certifications of transfer and property registration notifications, and claimed that this documentation demonstrated that all lots, buildings, and properties in the Port are under its legal control and responsibility. The certifications provided with the Applicant’s response are dated June 3, 2024, and the registration notifications are dated June 11, 2024.

On October 17, 2024, the FEMA Region 2 Regional Administrator denied the appeal, finding the Applicant did not demonstrate legal responsibility for repairs to the Facility.[5] FEMA stated that transfer of the Port-related assets occurred nearly two years after the disaster declaration, which means the Applicant was not the legal owner of the Facility at the time of the declared disaster. FEMA further stated that the MOUs and the Applicant’s collection of harbor maintenance fees and tariffs did not establish legal responsibility for repair of the Facility at the time of the disaster. Finally, regarding the lease agreement, FEMA stated that the Applicant had not provided the insurance documentation requested in the RFI. Therefore, it could not verify whether the claimed repair costs exceeded any insurance proceeds the Applicant received and, consequently, could not verify whether the Applicant was responsible for Facility repairs.

Second Appeal

In a letter dated December 16, 2024, the Applicant submitted its second appeal, reiterating previous arguments and asserting that the information provided demonstrates that it was legally responsible for the Facility at the time of the disaster.[6] In a letter dated February 18, 2025, the Recipient forwarded the appeal to FEMA with its support.

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 (such as for leased facilities).[9] To determine ownership, FEMA may review deeds, title documents, and local government tax records.[10] For leased facilities owned by another party, FEMA reviews the lease agreement to determine legal responsibility for repair of damage caused by the incident.[11] If the lease does not specify either party as responsible, FEMA considers the owner of the facility legally responsible for the costs to restore the facility.[12]

The Applicant seeks $46,176.93 in PA to repair the Facility but has not demonstrated it had legal responsibility for disaster-related restoration at the time of the disaster. While LL 240, enacted in 2011, laid the groundwork for transferring ownership of the Port-related assets to the Applicant, the transfer was not complete at the time of the disaster as demonstrated by the property transfer certifications that were issued nearly two years after the disaster. Therefore, legal responsibility is not established based on ownership of the Facility.

FEMA considered whether any written agreements established legal responsibility for repairs to the Facility. The Applicant provided the lease agreement showing that it was leasing the Facility from the Ponce Authority at the time of the disaster.[13] The lease agreement states that the Ponce Authority was responsible for repairing or rebuilding the Facility, but the Applicant was required to pay the insurance deductible and any repair costs in excess of insurance proceeds received. In the RFI, FEMA requested insurance settlement documentation that might record the Applicant’s obligation to pay for repairs. However, the Applicant did not provide any such documentation. Therefore, FEMA is unable to determine whether the Applicant was legally responsible for repair costs under the terms of the lease agreement.[14]

Similarly, the Applicant does not provide other written agreements that establish it was legally responsible for the disaster repairs. The Applicant provided multiple MOUs for FEMA’s consideration; however, only one MOU was executed before the disaster, and it did not recognize the Applicant’s responsibility to repair disaster-related damages to the Facility.[15] Finally, the Applicant’s claim that it is legally responsible for maintenance of the Facility because it is authorized to collect harbor maintenance fees and tariffs is not persuasive, as the regulations cited by the Applicant do not establish its legal responsibility for repairs or maintenance of the Facility.[16]

Based on the documents in the record, the Applicant has not demonstrated that it owned the Facility at the time of the disaster or had legal responsibility for disaster-related repairs to the Facility through the terms of any written agreements.

Conclusion

FEMA finds that the Applicant has not demonstrated it had legal responsibility for the requested repairs at the time of the disaster. Therefore, this appeal is denied.