Pre-positioned Resources

Appeal Brief

Appeal Letter

Appeal Analysis

Background

The Long Island Power Authority (Applicant) is a public utility that provides electrical services to customers in Suffolk County, New York.  In March 2017, a severe winter storm was predicted to cause damage throughout New York, including in Suffolk County.[1]  The Applicant expected outages and in preparation, it pre-positioned electrical contractors to perform utility repair work in Suffolk County.  The storm changed direction and did not hit Suffolk County as expected, and the Applicant cancelled its request for electrical crews.  Some of the electrical contractors were en route from out of state, while the contractors who had already arrived were in staging areas on standby.  These pre-positioned electrical contractors did not perform emergency work as a result of the disaster.

FEMA prepared Project Worksheet (PW) 707 to document $8,933,248.50 in costs incurred by the Applicant to pre-position the electrical contractors.  The Agency determined on June 20, 2018 that those costs were ineligible for Public Assistance (PA) funding.  FEMA found that pre-positioned resources are only eligible if they perform eligible emergency work.  Here, the electrical contractors who were pre-positioned did not perform eligible emergency work.

First Appeal

The Applicant appealed FEMA’s decision in a letter dated August 21, 2018.  The Applicant stated: (1) the costs were for staging and standby for critical emergency crews; (2) it was prudent to pre-position the electrical contractors and these crews played a key role in protecting public health and safety, especially to those citizens vulnerable to power outages; (3) FEMA verbally approved the costs during a preliminary damage assessment on May 11, 2017; (4) FEMA’s standby policy covers theses costs because they were in preparation for and directly related to actions necessary to save lives and protect public health and safety; and (5) the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) and Title 44 of the Code of Federal Regulations (44 C.F.R.) do not bar costs for pre-positioning so FEMA can grant an exception or amend its policy to allow for the costs.

The New York State Division of Homeland Security and Emergency Services (Grantee) supported the Applicant’s appeal in a September 26, 2018 memorandum.  The Grantee acknowledged FEMA policy only reimburses costs for unused, pre-positioned resources, for evacuations or emergency medical care during an evacuation, and not for power restoration.  However, the Grantee argued all pre-positioned resources should be eligible, regardless of usage.  It stated that FEMA’s policy is arbitrary and not supported by law or regulation. 

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The FEMA Region II Regional Administrator (RA) denied the appeal on February 25, 2019.  The RA stated that FEMA policy only allows costs for pre-positioned resources if those resources are used in the performance of eligible emergency work.  Eligible emergency work is work providing essential assistance to meet an immediate threat to life and property due to a major disaster.  The pre-positioned electrical contractors did not perform eligible emergency work.  Therefore, the Applicant’s costs to pre-position contractors intended to perform electrical work were not eligible.  The RA also stated that while the Applicant argues FEMA’s policy on standby time allows for reimbursement for the costs, the Agency’s policy on pre-positioning resources is clear and the costs for standby time for pre-positioned unused resources was not eligible.

Second Appeal

In its second appeal dated April 17, 2019, the Applicant reiterates its position from first appeal that pre-positioning resources is key to protecting public health and safety, especially the lives of the elderly and other vulnerable persons.  The Applicant states that it services 14 hospitals, 90 nursing/adult homes, and over 1,200 critical care facilities.  It also has more than 4,000 residential customers on life sustaining equipment in Suffolk County.  The Applicant explained that due to technological advances, dependency on electricity has increased immensely and storms can paralyze an area for days.  The Applicant states that transporting and pre-positioning equipment and other resources for response are emergency protective measures.  The Applicant argues that the pre-positioning is consistent with the intent of Congress to provide an orderly and continuing means of assistance by the Federal Government; the Stafford Act and 44 C.F.R. do not limit unused, pre-positioned resources; and FEMA policy does not expressly exclude these resources, it only mentions medical care and evacuations as examples of eligible work.  The Applicant states that pre-positioning work crews to protect those dependent on electricity is an emergency protective measure.  Furthermore, the Applicant contends that FEMA policy permits reimbursement for standby costs. 

The Grantee concurs in a June 14, 2019 letter.  It notes FEMA has not provided any reason for the policy distinction between unused pre-positioned resources for evacuations and those for other emergency protective measures.  It therefore argues this standard is arbitrary.  It also notes that preparing to restore power quickly is much more viable than attempting to evacuate the vulnerable population ahead of severe winter storm and the costs to do so should be eligible for PA funding.

Discussion

The Stafford Act § 403 grants FEMA discretionary authority to provide assistance essential to meet immediate threats to life and property resulting from a major disaster.  Implementing this authority, 44 C.F.R. § 206.225(a) authorizes reimbursement of emergency protective measures necessary to eliminate or lessen immediate threats to life, public health, or safety, as well as threats of significant additional damage to improved property.  However, costs related to pre-positioning resources for a disaster are only eligible if the resources are used in the performance of eligible emergency work.[2]  The only exceptions to this prohibition are for costs to pre-position resources for evacuating, or providing emergency medical care during the evacuation period, which are eligible even if those resources are not used.[3]

Here, the Applicant pre-positioned electrical contractors prior to the disaster to be ready to deal with power outages.  However, the storm changed direction and the contractors did not perform emergency work.  FEMA policy is clear that pre-positioning costs are only eligible if the contractors performed eligible emergency work.  These electrical contractors did not.  Therefore, the costs for pre-positioning the crews are not eligible.  The policy does not include evacuations or providing emergency medical care during evacuations as examples, but rather they are exceptions to the prohibition because they are life saving measures.

Standby time in preparation for emergency work to save lives and protect public health and safety is eligible in limited circumstances.[4]  The Applicant states that FEMA policy allows for the standby costs to be eligible and the RA did not address the argument in his appeal decision.  However, the RA correctly noted that because FEMA’s pre-positioning resources policy expressly disallows the costs in this instance, the issue should not be evaluated under the standby policy rule. 

Conclusion

The costs incurred by the Applicant to pre-position electrical contractors, who did not perform eligible emergency work, are ineligible for reimbursement.  Accordingly, the second appeal is denied.