Direct Administrative Costs

Appeal Brief

Summary Paragraph

From October 26 to November 8, 2012, Hurricane Sandy caused damage to the Applicant’s facilities and FEMA prepared multiple project worksheets (PWs) to address the damage.  Of the 132 PWs prepared, the Port Authority of New York and New Jersey (Applicant) requested direct administrative costs (DAC) in each one.  On January 29, 2013, President Obama signed into law the Sandy Recovery Improvement Act of 2013.  This law amends the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) and added section 428, which authorizes Public Assistance alternative procedures (PAAP), in part, to increase flexibility in the administration of Public Assistance (PA) grants.  In 2014, FEMA entered into an arrangement with the State of New York, and City of New York (NYC), whereby FEMA would fund DAC for NYC as a 4 percent allowance for each project, instead of calculating the actual DAC incurred per project, which was the method permitted under PA policy. The arrangement was reflected in an Addendum to PAAP policy and guidance.  On September 20, 2017, the Applicant requested FEMA waive its DAC requirement (of submitting the actual costs of each PW) and allow the Applicant to submit a flat rate, 4 percent DAC for each PW (as was done by NYC).  NYDHSES and the New Jersey Office of Emergency Management (NJOEM) (collectively, the Grantees) supported this request and transmitted the request on November 22, 2017 and December 6, 2017.  In a June 4, 2018 letter, FEMA denied the request.  The Applicant appealed FEMA’s denial in a letter dated August 3, 2018 and stated that the requirements to track DAC are onerous and burdensome for an agency of its size and complexity and a streamlining of the process to a fixed 4 percent would help reduce FEMA’s administrative burden and cost.  The FEMA Region II Regional Administrator (RA) denied the appeal on April 9, 2019, finding that FEMA was not considering new Hurricane Sandy projects after October 20, 2017, and the request was submitted by the Grantees on November 22, 2017 and December 6, 2017 (even though the Applicant submitted the request to the Grantees prior to the October 20 deadline).  In a letter dated October 20, 2017, FEMA accepted 52 additional PAAP projects, including two of the Applicant’s, but also stated that it would no longer consider any Hurricane Sandy projects for the PAAP Program.  The Applicant appeals the RA’s decision and states that it is well within FEMA’s authority to provide the Port Authority with an arrangement similar to that of NYC and requests that FEMA reopen the PAAP program for Hurricane Sandy projects to grant its DAC proposal. 

Authorities and Second Appeals

• Stafford Act § 428.
• DAP 9525.9, Section 324 Management Costs and Direct Administrative Costs.
• New York City Direct Administrative Cost (DAC) – Addendum to 428 and Non-Fixed Estimate Public Assistance Policy and Guidance (Nov. 24, 2014).
• Public Assistance Alternative Procedures for Direct Administrative Costs (Oct. 25, 2017).

Headnotes

• Pursuant to DAP 9525.9, FEMA reimburses DAC incurred by applicants that are properly documented and can be tracked, charged, and accounted for directly to a specific project.  Section 428 of the Stafford Act allowed for alternative procedures and under an addendum to the PAAP, FEMA funded DAC for NYC as a 4 percent allowance for each project, instead of calculating the actual DAC incurred per project.
  • Section 428 of the Stafford Act is a discretionary program and FEMA determined in October 2017 that it would no longer consider any additional Hurricane Sandy projects under the PAAP Program.  As such, the Applicant’s projects must calculate DAC pursuant to DAP 9525.9. 
     

Conclusion

Section 428 of the Stafford Act is a discretionary program and FEMA determined in October 2017 that it would no longer consider any additional Hurricane Sandy projects under the PAAP Program.  Accordingly, FEMA is denying this appeal. 

Appeal Letter