Timeliness, Time Extension – Work

Appeal Brief

Summary

In June 2011, the President declared a major disaster for flooding that began in May 2011 in western Iowa.  In August 2011, the Tribe elected to act as its own grantee.  In early 2012, FEMA obligated $2,004,019.67 in Project Worksheets (PWs) 8, 16, 32, and 35, to demolish and replace a convenience store, its sign and contents, and a fuel plaza.  The Tribe’s first priorities after the disaster were reconstructing a casino building and homes.  Therefore, the Tribe used the $1,503,014.00 federal share FEMA obligated for PWs 8, 16, 32 and 35 toward reconstructing the casino building.  The Tribe spent two and a half years looking for alternate site locations to rebuild the convenience store and fuel plaza.  In May 2015, the Tribe requested approval for an alternate project, seeking Federal assistance to build a retail center rather than rebuild the fuel plaza.  The estimated completion date for the new project was December, 2015.  On November 2, 2015, FEMA Region VII denied the Tribe’s request for an alternate project and time extension.  FEMA found that (1) the Tribe’s willingness to spend federal funding for work not-yet-complete jeopardized the completion of additional work and (2) the Tribe had not provided FEMA with the necessary assurance that it could complete the proposed alternate project within the requested time period.  The Tribe appealed FEMA’s decision on January 4, 2016, noting it made positive changes to its financial management system and possessed the financial resources to fund the Retail Center.  On October 19, 2016, FEMA Region VII’s RA denied the appeal and determined the Tribe failed to demonstrate extenuating circumstances beyond its control that would warrant extension of the period of performance and approval of an alternate project.  In addition, the RA found that the Tribe failed to demonstrate it could complete the alternate project within the timeframe requested.  The Tribe received the first appeal decision on October 21, 2016.  In its second appeal, dated December 26, 2016, the Tribe addresses the RA’s determinations.

Authorities and Second Appeals

• Stafford Act § 423(a).
• 44 C.F.R. §§ 206.206(c)(1), 206.204(c)-(d).
• Roseau County Hwy Dept., FEMA-1288-DR-MN, at 8 (Jan. 06, 2017); Dep’t. of Transp., FEMA-4068-DR-FL, at 3 (Aug. 5, 2016); City of Plattsburgh, FEMA-4020-DR-NY, at 4 (June 8, 2016); San Pasqual Indian Reservation, FEMA-1731-DR-CA (Jan. 16, 2014); Hancock County Water and Sewer District, FEMA-1604-DR-MS, at 3 (May 28, 2014); La Jolla Band of Luiseno Indians, FEMA-1731-DR-CA (Jan. 4, 2010).

Headnotes

• Stafford Act § 423, as implemented by 44 C.F.R. § 206.206(c)(1), allows an eligible applicant, subgrantee, or grantee, to appeal any Public Assistance determination within 60 days of receiving notice of the appealable action.
  • The Tribe, acting as its own grantee, submitted its second appeal more than 60 days after receiving notice of the denial of Federal assistance.
• Under 44 C.F.R. § 206.204(c)(2)(ii), a permanent work project must be completed within 18 months of the applicable major disaster or emergency declaration.  A grantee may extend this deadline for 30 months if warranted by extenuating circumstances or unusual project requirements beyond the subgrantee’s control.
  • The grantee’s authority to grant a project time extension expired June 2015, 48 months after the major disaster declaration.   
• Under 44 C.F.R. § 206.204(d)(2), any time extension requests beyond the grantee’s authority must be submitted to the RA and include a detailed justification for the delay and a projected completion date.  The RA shall review the request and make a determination.
  • The RA properly exercised her discretion when she found the Tribe had not demonstrated circumstances warranting a time extension.  As the Tribe does not allege any new justification than previously raised, FEMA affirms the RA’s decision.

Appeal Letter

Appeal Analysis

Background

From May 25 through August 1, 2011, torrential rainfall caused the Missouri River to flood a convenience store and fuel plaza located in Onawa, Iowa, and owned by the Omaha Tribe of Nebraska and Iowa (Tribe).  On June 27, 2011, the President declared a major disaster for the State of Iowa.  In August 2011, the Tribe elected to participate as a grantee.[1]  In early 2012, FEMA obligated Project Worksheet (PW) 8 for the demolition and replacement of the convenience store, PWs 16 and 32 for the replacement of the store’s sign and contents, respectively, and PW 35 for the demolition and replacement of the fuel plaza.  The four projects totaled $2,004,019.67.[2]  On May 25, 2015, the Tribe requested approval for an alternate project to construct a retail center, which would provide space for a grocery store, restaurant/fast food location and four business spaces, but would not include the fuel plaza.  The estimated completion date was December, 2015.  On July 23, 2015, FEMA transmitted a request for information (RFI), seeking a written explanation and supporting documentation as to why the $1,503,014.00 federal share FEMA obligated in PWs 8, 16, 32, and 35, had been drawn down.[3] 

On August 28, 2015, the Tribe responded and confirmed that all federal funds for the disaster had been expended but explained as justification, that as a new grantee with FEMA, it had a large learning curve for recovery projects.  It hired an accounting firm in the fall of 2012 to help, but the Tribe acknowledged the firm had “no experience with the FEMA process and made payments out of sequence.” [4]  The Tribe admitted its financial firm erroneously used the federal share FEMA obligated for PWs 8, 16, 32, and 35, toward reconstruction of a casino building, funded under another PW, rather than toward the approved projects with which the funds were associated.[5]  Furthermore, the firm expended those federal funds on the casino project prior to applying non-federal cost share funds.[6]  The Tribe acknowledged FEMA wanted it to demonstrate its capacity to meet the non-federal share requirements for the projects,[7]  noted it had been working to meet all of its obligations as a grantee, and argued that approval of the alternate project and extension would help the Tribe return a much needed economic enterprise back to its people.  It asserted a time extension would afford it time to complete the project and raise $2 million to replace the expended funds.   

On November 2, 2015, FEMA Region VII denied the Tribe’s request for an alternate project and time extension.[8]  FEMA found that the Tribe’s improper expenditure of federal funds jeopardized the completion of the approved work.  Furthermore, it found the Tribe had not provided FEMA with the necessary assurance that it could complete the proposed alternate project within the requested time period.  

First Appeal

The Tribe appealed FEMA’s decision on January 4, 2016, and requested approval for an alternate project and a time extension.  It stated as support, that it: (1) terminated the outside financial management firms that had erroneously expended the Federal and Tribal shares; (2) hired an experienced Chief Financial Officer (CFO); (3) placed $2,026,698.00 in a project specific bank account to demonstrate it had the funds readily available to complete the project; and (4) followed procurement procedures and received a bid within the $2,026,698.00 budget and a construction completion date of six months.

On February 1, 2016, FEMA transmitted a Final RFI to the Tribe.  Through it FEMA requested: (1) a detailed explanation of the extenuating circumstances beyond the Tribe’s control that justify the time extension; (2) the resume of the new CFO, including any documentation relating to the CFO’s experience administering federal grant funding; (3) documentation demonstrating the Tribe returned the federal share erroneously drawn and the Tribe’s willingness to comply with cash management regulations; (4) a revised completion date with a detailed timeline and whether there is a need for completion of any design work; (5) a signed certification from the contractor indicating the project can be completed within the timeframe described by the Tribe, specifically indicating the number of months needed for completion and the date the contractor can begin; and (6) documentation confirming the procurement procedures used.[9] 

The Tribe responded on March 4, 2016 and indicated the primary reason the time extension was needed was due to the magnitude of the disaster and large number of recovery projects associated with it.[10]  The Tribe stated that because it had 73 funded recovery projects, totaling $16,000,000.00, its first priorities were to restore jobs and homes for its people through the casino and housing re-construction.[11]  The Tribe asserted this project was also a priority, but that it could not rebuild the facilities on the original site because of FEMA flood mitigation requirements[12] and the complexity of the project, and consequently needed time to find a suitable alternate location.  The Tribe began looking for an alternate site in the fall of 2012.  By the spring of 2013, no adequate alternate sites were identified and the Tribe put the project on hold.    The Tribe asserted it attempted to purchase several properties in 2013 and 2014 that would have been suitable to sustain the fuel plaza, but that none of the transactions were finalized due to price and availability.  Finally, in 2015, after failing to find a suitable alternate location for the fuel plaza, the Tribe decided instead to build a retail center.[13]   

The Tribe also submitted the resume of its CFO and provided a completion date of seven months from the date of approval of the alternate project.  However, the Tribe noted that it would need to solicit new bids based on a modified design, adjusted budget, and interest from additional bidders.[14]  Last, the Applicant addressed FEMA’s request for information on its procurement methods, conceding that conversations occurred between a prospective contractor and the Tribe’s director of emergency management, but asserting they were simply to provide clarification because previous bid proposals from that contractor had been rejected for failing to follow requested specifications.[15]                   

On October 19, 2016, FEMA Region VII’s Regional Administrator (RA) denied the Tribe’s appeal and determined the Tribe failed to demonstrate extenuating circumstances beyond its control to warrant extension of the period of performance and approval of an alternate project.  In addition, the RA found that the Tribe did not show it could complete the alternate project within the timeframe requested, based on the progress made to date.  The Tribe received the RA’s decision on October 21, 2016.[16]

Second Appeal

The Tribe submitted its second appeal through a letter dated December 26, 2016, which FEMA received on December 28, 2016.  In its second appeal, the Tribe requests an alternate project for PWs 8, 16, 32 and 35, and a time extension, contending FEMA did not appropriately consider the reasons underlying its requests.  Specifically, the Tribe asserts it: (1) was overwhelmed by the overall magnitude of the disaster and the resources it required, but has learned from the process; (2) has worked diligently to correct shortcomings and misunderstandings regarding how FEMA funds may be managed; (3) has performed the corrective action of returning $1,347,256.65 to FEMA and made positive changes in financial management staff and policy to correct and prevent future errors; (4) no longer has multiple projects to manage and can focus resources on this project to complete it in a timely manner; and (5) will meet the requirements of Title 44 Code of Federal Regulations (44 C.F.R.) § 13.36 in contracting for the alternate project.[17]

Discussion

Time Extension – Work 

Generally, applicants have 18 months from the date of declaration of the disaster to complete permanent work.[18]  A grantee may extend the deadline by an additional 30 months based on extenuating circumstances or unusual project requirements beyond the control of the applicant.[19]   A request for a time extension beyond a grantee’s authority must be submitted to the RA and include a detailed justification for the delay and a projected completion date.[20] 

Here, the Tribe submitted its request for a time extension to FEMA in May, 2015 because it was the only remaining recourse available under 44 C.F.R. § 206.204.  The initial period of performance expired December 27, 2012, 18 months from the disaster declaration date, and the Tribe, acting in the capacity of the grantee, had no authority to extend the deadline beyond June 27, 2015.  Consequently, absent FEMA approving a time extension to complete permanent work, the period of performance expired June 27, 2015. 

On second appeal, the Tribe argues that the RA did not appropriately evaluate the rationale for the time extension.  The Tribe’s second appeal, however, does not explain what part of the RA’s evaluation was in error or inaccurate.  The RA’s decision appropriately considered all of the arguments and supporting facts proffered by the Tribe.  The RA reviewed the Tribe’s assertion that a suitable alternate location had not yet been found, but determined the argument lacked specificity and identification of a compelling extenuating circumstance that led to the Tribe’s indecision.[21]  The RA also explained that the Tribe’s contention that the delay was due to the magnitude of the disaster and that other recovery priorities needed to be considered first were without merit due to the considerable amount of time that passed since the disaster and resolution of the higher priority concerns.[22]  The RA also considered the Tribe’s concerns about the complexity of the project due to onerous flood mitigation requirements, but found the PW did not contain any elevation requirements.  Lastly, the RA found the Tribe’s inability to select a location for the original facility was not compelling because it was within the Tribe’s control.[23]  FEMA finds that the Tribe has not demonstrated that the RA’s decision was factually or logically in error.  Consequently, the RA properly exercised her discretion in denying the Tribe’s request for a time extension.[24]  As the period of performance has expired, FEMA denies the request for an alternate project.  

Appeal Timeliness

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) § 423 provides that: “[a]ny decision regarding eligibility for, from, or amount of assistance under this title may be appealed within 60 days after the date on which the applicant for such assistance is notified of the award or denial of award of such assistance.”[25]  44 C.F.R. § 206.206, which implements that provision,[26] requires appellants to submit appeals within 60 days of receipt of the notice of the action that is being appealed.[27]  Neither the Stafford Act nor 44 C.F.R. provides FEMA with authority to grant time extensions for filing appeals.[28] 

Here, the Tribe, which is the Appellant, received the first appeal decision on October 21, 2016.  The Tribe had until December 20, 2016 to file its second appeal, but submitted it on December 26, 2016, which was after the 60-day timeframe. Nevertheless, even if timeliness were not an issue, this appeal still fails on the substantive merits.

Conclusion

Because the timeframe for completing permanent work has expired and the circumstances surrounding the delay are not extenuating, denial of an extension of the timeframe for completion and approval of an alternate project was appropriate.  Further, the Tribe submitted its second appeal after the 60-day timeframe for submission of appeals.  Accordingly, the appeal is denied.