Slope Failure - Scope of Work

Appeal Brief

Summary Paragraph

In April and May 2011, a declared series of rain events caused a slope and retaining wall failure and damaged the two-lane asphalt Road 52 owned by the Lawrence County Engineer (Applicant).  FEMA prepared Project Worksheet (PW) 942, for $226,209.73, for the temporary and permanent repairs.  In October 2012, the Applicant’s engineer performed surface boring tests and concluded that the roadbed was stable enough for construction.  The engineer noted an indication of past soil movement but did not state where or when the movement occurred.  During construction, the project scope of work was changed without FEMA preapproval, to add excavation of the entire roadbed, relocation of a waterline and installation of two retaining wall drains.  On June 25, 2013, the project was completed for $347,582.62.  On Final Inspection, the Grantee found a $121,372.89 cost overrun and recommended final payment of $347,582.62.  FEMA approved $52,056.23 of the overrun but considered the costs for the waterline relocation, the additional excavation and the wall drains, totaling $74,153.69, ineligible.  On January 28, 2014, the Applicant appealed.  On June 3, 2014, FEMA issued a Request for Information (RFI) asking for a geotechnical report or other documentation substantiating the pre-event condition of the site.  The Applicant did not provide new documentation.  FEMA Region V’s Regional Administrator (RA) denied the appeal and deobligated $263,985.23 because the appeal was filed after the deadline.  In addition, the RA did not approve the scope changes for the waterline relocation, excavation or wall drains.  Finally, because the Applicant’s engineers stated the site’s integral ground was unstable before the disaster, the RA determined that costs associated with work on the integral ground were not eligible.  On second appeal, the Applicant requests $333,302.08 in increased funding for the waterline relocation, the additional excavation, the wall drains and the reinstatement of all project funding because the integral ground was stable before the disaster.  The Applicant simultaneously filed a new first appeal with Region V on the integral ground issue.  On this second appeal, FEMA found that the first appeal was timely filed, there is insufficient evidence to support finding that the site’s integral ground was unstable before the disaster, and the wall drains are a best construction practice.  As such, the appeal should be granted regarding these issues.  However, the waterline relocation and the roadbed excavation were completed without FEMA preapproval; and are not eligible for PA reimbursement.

Authorities and Second Appeals

• Stafford Act § 423, 42 U.S.C. § 5189(a)

• 44 C.F.R. §§ 13.30(d)(1), 206.206(c)(1) and (2)

• PA Guide, FEMA 322 at 112, 140

• RP9524.2, Landslides and Slope Failures, at 4

Headnotes

• Stafford Act § 423 and 44 C.F.R. § 206.206(c)(1) requires an Applicant to appeal a denial regarding eligibility for, from, or amount of Public Assistance within 60 days after the date on which it was notified of the denial.

  • Applicant filed its appeal 40 days after receiving notification that closeout had only partially approved the overrun.

• Pursuant to 44 C.F.R. §13.30(d)(1) the subgrantee is required to obtain the prior approval of the awarding agency when there is a revision of the scope or objectives of the project.

  • Applicant did not obtain prior FEMA approval before moving the waterline and excavating the roadbed, so those elements are not eligible for funding.

• RP9524.2 states that FEMA must determine the stability of the site before it can approve funding to repair an eligible facility.

  • The statement in the Applicant’s engineers’ letter about past soil movement lacked enough specificity to determine the state of integral ground stability at the time of the disaster.

Appeal Letter

Appeal Analysis

Background

In April and May 2011, a series of rain events caused flooding and excess storm water runoff in southern Ohio.  The heavy rain and flooding saturated the ground causing an embankment failure to Lawrence County Road 52, approximately 2 miles southeast of State Highway 141.  Lawrence County Engineer (Applicant) is legally responsible for and maintains that roadway.

FEMA conducted a site inspection and found that the Applicant had placed 144 tons of aggregate on the road as a temporary repair and the underground waterline was repaired in place by the local utility company.[1]  FEMA personnel also determined that the embankment beneath the eastbound lane of County Road 52 and the sod shoulder eroded and failed causing significant bulging of the embankment slope and slope failure.  Additionally, FEMA found that the slope failure displaced an existing retaining wall and broke an underground waterline beneath the embankment side shoulder.[2]  To address the damage, FEMA prepared Project Worksheet (PW) 942, for $226,209.73, for the temporary and permanent repair project.  The PW included the statement, “[i]f additional damage to the facility is found, or the site conditions change once work has begun, the applicant must notify the [Ohio Emergency Management Agency] and forward all documentation and Scope of Work change requests.  Approval from Ohio EMA and/or FEMA will be required for any change in the Scope of Work before that work begins.”[3]

On October 29, 2012, the Applicant’s geotechnical engineers submitted a letter report detailing the results of the subsurface exploration of the roadway conducted that summer.  The engineers agreed with FEMA that the slope failure was caused by embankment soil saturation resulting from the declared storms.  The letter also stated: “[w]e found the fill and the upper zone of the natural clay base and sandy soils have very moist/wet and soft/loose zones that were indicative of past movement.”[4]

Following initial development of PW 942, the Applicant completed additional construction to relocate a repaired underground waterline, excavate the entire length of the damaged roadbed, and install two drains in the pile driven retaining wall.  The Grantee prepared a final inspection memorandum, finding a cost overrun of $121,372.89, that it was necessary to relocate the underground waterline to the opposite side of the road and that the two wall drains were installed to mitigate the effects of water trapped behind the retaining wall.  The Grantee recommended a final payment of $347,582.62.[5] 

In December 2013, FEMA closed out PW 942 and obligated an additional $52,056.04 to account for a cost overrun due to capital improvements, direct administrative costs and incidental costs such as traffic control, notifications and mobilization.  The PW close out version did not include funding of $74,153.69 for the waterline relocation, the additional roadbed excavation and the wall drains, stating: “[a]lthough these items may have been deemed required by the applicant for project completion and may have been within the existing footprint of the facility, FEMA was not notified of the substantial changes/improvements in the approved SOW and increase in costs as required by the program.”[6]  Following closeout of PW 942, the Grantee notified the Applicant of FEMA’s determination regarding the water line, roadway excavation and wall drains via email.  The email also reminded the Applicant of the 60 day deadline in which to file an appeal.

First Appeal

The Applicant submitted a first appeal by letter to the Grantee on January 28, 2014, appealing FEMA’s decision to not approve $74,153.69 for the water line relocation, the additional roadway excavation and the wall drains.[7]  In the first appeal, the Applicant asserted that the waterline relocation was not identified in the PW because the need for the work was not known until the final project design was completed.[8]  The Applicant said that after final design was complete, it notified the Grantee about the move and was told it should be eligible for FEMA funding.  The Applicant asserted that Grantee did not ask for a written scope revision or other documentation.[9]

According to the Applicant, the PW damage description clearly showed that the entire roadbed required replacement.  Additionally, the Applicant contended it was impossible for FEMA to determine an accurate scope of work because a visual inspection was not possible as 144 tons of aggregate had been graded in place at the time of the site visit.[10]  Moreover, the Applicant argued that the drains are an integral part in the design of any retaining wall, contending the wall will fail if drains are not installed.  Further, the Applicant noted that the drains are a minor item and the PW only listed major components.[11]

The Grantee forwarded the Applicant’s letter to FEMA on February 20, 2014, and recommended granting the appeal.[12]  The Grantee asserted that FEMA’s use of an existing PW template led to cost estimating format (CEF) unit price errors, the denial of the water line relocation and the denial of additional excavation because the template only included major construction components.[13]

On June 3, 2014, FEMA Region V issued a Request for Information (RFI) to the Applicant asking for a geotechnical report or other documentation to substantiate the pre-event condition of the site.[14]  The Grantee responded by uploading additional documentation directly into the Emergency Management Mission Integrated Environment (EMMIE), FEMA’s internet-based enterprise wide single eGrants system. 

FEMA’s Region V Regional Administrator (RA) denied the appeal on October 9, 2014, finding the appeal was not filed within the 60-day allowable time limit.[15]  She also determined that the Applicant did not obtain FEMA’s prior written approval before changing the scope of work for the three questioned elements.[16]  Additionally, she found the Applicant’s engineers’ letter indicates predisaster site instability and determined the work on the integral ground ineligible for funding.  Moreover, the RA stated that the Applicant’s RFI response did not include any new information about the pre-event condition of the site and concluded $263,985.23[17] would be deobligated from PW 942 as a result. [18]  In November 2014, PW 942 was amended and funding was reduced to $14,280.54.[19] 

Second Appeal

The Applicant sent a second appeal letter to the Grantee dated December 4, 2014.[20]  Through it, the Applicant asserts: (1) the original first appeal was timely filed; (2) the work completed was the minimum necessary to return the facility’s pre-disaster design, function and capacity as described in the PW scope of work; (3) there is no time limit regarding when a cost overrun can be submitted; (4) the integral ground stability deobligation is subject to a separate first appeal; (5) all damages are considered flood related; and (6) it is impossible to determine the time or the specific location of the engineers’ statement that there was past movement of the ground.[21]

The Applicant requests $333,302.08 for the slope repair related to the integral ground stability, the waterline relocation, the additional roadway excavation and the retaining wall drains.[22]  On January 23, 2015, the Grantee forwarded the second appeal to FEMA.  It supported the appeal and argued that: (1) the appeal was timely filed because the Applicant is appealing PW 942 Version 1 rather than Version 0; (2) 44 C.F.R. § 206.205(b)(2) allows FEMA to waive the scope change notice requirement; (3) the FEMA PA Guide[23] does not indicate that if work is not pre-approved costs will be made ineligible; (4) FEMA Environmental and Historical Preservation (EHP) determined the waterline relocation, the additional road repairs and the drain pipe constituted a categorical exclusion (CATEX); (5) Second Appeal Analysis, Lewis and Clark Rural Water System, FEMA-1984-DR-SD, upheld eligibility when the Applicant established the work was disaster related even though no prior approval was requested; and (6) the RA’s integral ground stability deobligation is unrelated to the existing appeal and should be given a full two-tier appeal.[24]

Discussion

Timeliness

The Robert T. Stafford Disaster Relief and Emergency Assistance (Stafford Act) § 423 requires an applicant to appeal a denial of eligibility for Public Assistance within 60 days after the date on which it was notified of the determination.[25]  Pursuant to Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.206, which implements that provision, the Grantee must submit appeals from an applicant, with a written recommendation, to the RA within 60 days of receipt.[26]  

In the first appeal response, the RA found the Applicant did not appeal Version 0 within 60 days.[27]  However, the Applicant was not aware of any eligibility issues until December 19, 2013, following FEMA’s closeout denial of costs associated with a change in the scope of work, based on the Grantee’s final inspection report.[28]  The Applicant sent the notice of appeal to the Grantee on January 28, 2014, 40 days after receipt of the notification.[29]  Therefore the appeal was timely filed.

Stability of Integral Ground

Stafford Act § 406 allows FEMA to provide funding to a local government for the repair of a public facility damaged or destroyed by a major disaster, including damage caused by slope failures.[30]   FEMA issued Recovery Policy RP9524.2, Landslides and Slope Stability Related to Public Facilities, to specifically define slope stability eligibility:

“FEMA must determine the stability of the site where the damaged facility is located before it can approve funding to repair or restore an eligible facility and its integral ground.  If the site is unstable and the instability is the direct result of the declared disaster (i.e., there is no evidence of instability after the facility was constructed and before the disaster), FEMA will fund the permanent repair or restoration of an eligible facility and its integral ground.”[31]

The Applicant challenges the RA’s deobligation determination based on evidence that the site’s integral ground was not stable before the disaster.  Although this issue is raised in the new first appeal, the matter is resolved through this second appeal.

PW 942 does not directly address integral ground stability, other than to say heavy rains from the declared event led to the slope failure, and that all damages are considered flood related.  The PW includes an estimate for funding to construct a 260 foot retaining wall in lieu of excavating the embankment.[32]

In the first appeal, the RA determined the site’s integral ground was not stable prior to the declared event, relying on the statement in the engineer’s letter about past soil movement.  She pointed out that there is no geotechnical survey or other evidence to indicate the integral ground was stable before the declared event.[33]  However, DAP 9524.2, Landslides and Slope Stability Related to Public Facilities, states that FEMA must determine the stability of the site before it can approve funding to repair or restore the facility.  During the initial development of PW 942, FEMA conducted a site inspection and attributed the slope failure to saturation of the embankment soils resulting from the declared event without mentioning integral slope stability.[34]  Based on this finding, FEMA obligated funding. 

While the engineers’ letter reads, in part: “[w]e found the fill and the upper zone of the natural clay base and sandy soils to have very moist/wet and soft/loose zones that were indicative of past movement, it goes on to say, “[o]ur findings agree with the FEMA findings.”  The engineer’s letter must be read and analyzed in its entirety.  The engineer’s letter does not clearly address when the past movement occurred or its cause.  In addition, the letter’s conclusion section, where the statement appears, is focused on the specific project to be completed not the pre-existing integral ground condition.  The RA’s interpretation of the engineer’s letter only focuses on one statement questioning past movement, without analyzing it in context with the entire document, and assumes the movement occurred before the disaster.  It must be noted that the engineer’s conclusion agreed with FEMA’s initial determination that the disaster caused the instability of the slope.  As there is insufficient information to conclude the site was unstable at the time of the event, the $263,985.23 of funding for that aspect of the project should not have been reduced.

Work Exceeding Approved Scope

Pursuant to 44 C.F.R. § 13.30(d), only FEMA can expand the eligible scope of work.[35]  In addition, the regulations require that applicants obtain FEMA’s approval prior to revising the scope or objectives of a project (regardless of whether there is an associated budget revision requiring prior approval).[36]  FEMA policy advises the applicant that it must notify the grantee as soon as a change of scope or need for additional funding is discovered.[37]  Moreover, the applicant should not assume that it can report scope change costs at the end of the project and FEMA will automatically fund the new costs.[38]

In the second appeal, the Applicant requests $920.00 for two drains installed in the pile driven retaining wall.  Not only is it a best construction practice to install drainage mechanisms when constructing a  retaining wall, it is necessary to keep the wall securely in place to avoid repeating the same type of damage in the future.[39]  While PW 942 does not specifically mention “wall drains,” it states, “[i]n accordance with good construction practices, the pre-disaster condition of this facility will be altered to enable the pre-disaster function to be restored.”[40]  As drainage is necessary for a retaining wall to function properly, it is clear that the installation of the two drains was inadvertently left out of the PW, and not work that exceeded the approved scope.  As such, that work is eligible for PA reimbursement.

Regarding the relocation of the utility waterline and the roadbed excavation, the Grantee seeks an exception to the prior approval requirement by pointing to a previous second appeal determination.[41]  In that appeal, the Applicant reported additional damage to a previously identified facility more than 60 days after the kick-off meeting and after the work was complete.  FEMA granted the appeal and made an exception to the pre-approval requirement because the time frame of the construction activities was limited by various environmental requirements, the original version of the project worksheet was not approved until 10 months after the initial site inspection and the Applicant presented information (e.g., site inspection notes and photographs) to document the newly identified damage.[42]  Here, no exceptional circumstances exist; the work was not time sensitive due to environmental requirements, the original version of the PW was not delayed and the Applicant did not document that the additional damage was disaster related.  Therefore, the preapproval rule applies and the work is not eligible.

The Grantee also implies that the categorical exclusion (CATEX) from FEMA Environmental and Historical Preservation (EHP) personnel exempts the additional work from the preapproval requirement.[43]  CATEX is limited to actions that do not impact the human environment, in this case exempting the need to prepare an Environmental Impact Statement or an Environmental Assessment.[44]  In addition to EHP requirements, FEMA policy sets forth additional basis for preapproval (e.g., 44 C.F.R. §206.204(e) compliance, and confirmation the damage is disaster related).[45]  So, preapproval was still required to insure regulatory compliance and to establish that the damage was disaster related even though the additional work did not require EHP review.

Finally, the Grantee argues FEMA’s reliance on a template for PW formulation resulted in several errors in the cost estimate and the denial of funding for the underground waterline relocation and the additional roadbed excavation.   FEMA acknowledges the use of the template and that the PW was written with the best information available at the time.[46]  Due to this, the PW clearly states that if additional damage to the facility is found or the site conditions change once work has begun the Applicant must notify the Grantee and any scope change requires preapproval.[47]  When the need for the scope change was discovered, the Applicant should have known that the PW did not include the waterline or roadbed work and should have requested preapproval before making the change.  In addition, it is the Applicant’s responsibility to alert FEMA if a PW’s scope of work is incomplete or does not adequately address the work that requires completion.

     I. waterline

Neither the Applicant nor the Grantee asserts that the Applicant was unaware of the regulatory requirement, as reiterated in the PW, to obtain pre-approval for scope changes from FEMA.  Further, the Applicant was aware moving the water line changed the scope because it contacted the Grantee.  Yet, FEMA was not notified of this additional work until reimbursement was sought at closeout.  Because the Applicant failed to notify FEMA of a scope change prior to the start of the project, this element of work is not eligible for funding.

     II. Roadbed Excavation

PW 942’s scope of work describes the roadway work as levelling and resurface placement of 30 cubic yards of asphaltic concrete.  The Applicant was familiar with the PW and reasonably should have known excavation of the entire damaged area exceeded the detailed scope.  The Applicant did not ask either the Grantee or FEMA for authorization.  Therefore, the extended excavation is not eligible for funding.

Stafford Act § 705(c)

The Stafford Act § 705(c) states that a State or local government shall not be liable to reimburse grant payments if the payment was authorized by an approved agreement specifying costs, the costs were reasonable and the purpose of the grant was accomplished.[48]  The Grantee asserts that this section applies to the RA’s decision to deobligate funding due to pre-disaster integral ground instability.[49]  As the project funding related to the integral ground stability issue has been restored and the three remaining questioned elements are unfunded cost overruns, the Stafford Act § 705(c) issue is moot.

Conclusion

The Applicant’s first appeal was timely filed.  There is not sufficient evidence that the site’s integral ground was unstable prior to the disaster to support the RA’s finding, so $263,985.23 is eligible.  Additionally, the wall drain installation is both necessary for the functional use of the retaining wall and customary for this type of construction.  As such, reimbursement for the $920.00 is also eligible.  However, the Applicant failed to get the required authorization for relocating the water line and excavating the entire road bed and consequently those items are ineligible for Public Assistance.