Operation of Permanently Mounted Generators

Appeal Brief

Appeal Letter

Appeal Analysis

Background

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage throughout Paulding County, causing downed utility lines and widespread power outages for multiple days.  The Paulding County Emergency Management Agency (Applicant) utilized two permanently mounted generators during the event to support emergency protective measures at its Emergency Operations Center and communications tower.  FEMA prepared Project Worksheet (PW) 510 for $3,803.32 to fund the fuel for the permanently mounted generators.  Because both of the generators were permanently mounted, FEMA did not reimburse the use of those generators based on FEMA’s equipment rates, but rather for fuel costs only. 

First Appeal

The Applicant submitted a first appeal for $2,125.00 in a letter dated March 11, 2013, asserting that reimbursement for the permanently mounted generator usage should be based on FEMA’s schedule of equipment rates because its permanently mounted generator was housed in a rented facility.  The FEMA Region V Regional Administrator denied the first appeal in a letter dated May 7, 2013, explaining that the depreciation and ownership costs of permanently mounted generators are viewed as components of the cost of operating the facility.

Second Appeal

The Applicant submitted a second appeal for $2,125.00 in a letter dated June 27, 2013, reiterating its request for FEMA to apply equipment rates in reimbursing the permanently mounted generator usage.  The Applicant’s second appeal letter states that the Applicant rents the facility that houses the generators and it has the responsibility of operating and maintaining the generators, not the facility owner. The Grantee supports the Applicant’s appeal and its transmittal letter also cites a second appeal under FEMA-3288-EM-FL, dated January 17, 2012, involving a Miami-Dade County, Florida, project for which FEMA funded permanently mounted generator costs using FEMA’s schedule of equipment rates.

Discussion

FEMA policy specifically provides that the cost of obtaining power from alternate sources, with a few exceptions, is considered an increased operating expense and is generally not eligible for Public Assistance.[1]  FEMA’s policy provides exceptions, however, for “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures.”[2]  A specific example of such an exception is the “increased utility costs of a permanently mounted generator at a hospital or police station.”[3]   The FEMA Public Assistance Guide also lists the use of “temporary generators for facilities that provide health and safety activities” as an example of an emergency protective measure that can be undertaken by a community before, during, and following a disaster.[4]

Recent appeals and appeal decisions have highlighted confusion with regard to distinguishing between the eligible costs associated with the use of permanently mounted generators compared to temporary generators and the underlying rationale for such distinctions.[5]  Use of the terms “portable” and “fixed” as interchangeable with “temporary” and “permanently mounted” has created additional ambiguity by primarily focusing on the physical placement of the generator rather than the duration, intent and purpose of the placement.  

As such, it is important to reinforce the distinction between temporary and permanently mounted generators.  FEMA reimburses the use of temporary generators based on FEMA equipment rates or similar set rates in large part because the purpose of the placement of those items at the facility is related to the disaster in question and temporary in nature.  FEMA equipment rates include such costs as operation of equipment, depreciation, overhead, maintenance, field repairs, fuel, lubricants, tires, Occupational Safety and Health Administration equipment, and other costs incidental to operation.  In contrast to temporary generators, permanently mounted generators, whether a fixture as described within OMB Circular A-87, mounted on a pad within a shed servicing a building, or affixed or otherwise bolted down to a slab adjacent to a building, typically have been placed in their locations for reasons that preceded the disaster and with an intent that they remain there afterward.  Hence, the fundamental purpose, nature, and duration of the placement of a permanent generator differ from a temporary generator that is brought in to provide temporary emergency power during the time of the disaster in question.  The purpose of permanently mounted generators is to provide backup power whenever necessary, and not only as a consequence of a disaster.  Recognizing such a purpose, it is reasonable to assume the associated overhead costs for permanently mounted generators is covered by the applicant’s operating budget and that the only out-of-pocket expense for operating them is the increased operating expense of fuel used.  Accordingly, FEMA will reimburse fuel costs for permanently mounted generators if they are used to perform eligible emergency work because those are the only increased costs incurred by the applicant as a direct result of the event.  This policy distinction applies to permanently mounted generators as a matter of principle, regardless of circumstances associated with an individual applicant’s insurance coverage, the placement of a permanently mounted generator in a leased facility, or whether maintenance costs for a permanently mounted generator are included in an applicant’s operating budget.

With regard to the fundamental issue of this appeal, the basic facts are analogous to those in the January 2014 Trimble Township Wastewater Treatment District second appeal decision.  The Trimble second appeal decision reinforced existing policy in finding that when permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work, but will not reimburse the usage based on equipment rates. 

Conclusion

FEMA does not reimburse the use of permanently mounted generators based on equipment rates.  However, if permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work.  In this case, FEMA has provided all of the eligible funding available for the permanently mounted generator usage in PW 510.