Increased Operating Costs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	4461
Applicant	Penny Slough Drainage District
Appeal Type	Second
PA ID#	000-UQCZK-00
PW ID#	GMP 120779
Date Signed	2023-03-13T16:00:00

Summary Paragraph

From February 24 to July 3, 2019, severe storms and flooding impacted western Illinois. The Penny Slough Drainage District (Applicant) claimed that the excessive rain and flooding overwhelmed its levee and drainage system. The Applicant requested Public Assistance funding for costs associated with various emergency measures, including permanent and rented pumping equipment to pump floodwaters away. FEMA formulated Grants Manager Project 120779 to capture Applicant’s claimed $225,992.69 for emergency pumping and flood fighting work. FEMA issued a Determination Memorandum denying all of the requested measures finding that the Applicant had not demonstrated the measures were necessary to protect lives, health and improved property. The Applicant appealed, and FEMA found that the Applicant did demonstrate that the emergency work was required to address an immediate threat to public health, safety and improved property. FEMA next examined the eligibility of specific costs requested by the Applicant, finding $102,607.06 in costs for eligible emergency work, in addition to $13,908.36 as additional maintenance costs, while denying $17,550.00 in costs for unspecified contract labor and $91,475.06 in fuel costs. The Applicant submits a second appeal, requesting FEMA consider the $91,475.06 in fuel costs, and not pursuing further the $17,550.00 in unspecified contract labor costs.

Authorities and Second Appeals

• Stafford Act § 403.
• 44 C.F.R. § 206.223(a)(3), 206.225(a).
• PAPPG, at 42, 60-61.
• Ste. Genevieve Levee District #3, FEMA-4551-DR-MO at 3.

Headnotes

• Increased costs of operating a facility are ineligible, even if directly related to the incident, but certain short-term emergency measures that are directly related to accomplishing specific emergency health and safety tasks may be eligible. Fuel for increased use of a pumping station is potentially an eligible increased operating expense.
  • The Applicant has demonstrated that the fuel costs were an eligible increased operating cost, as the costs were tied to eligible emergency actions, for a limited time, and were tracked and documented by the Applicant.

Conclusion

The Applicant has demonstrated that the $66,555.39 in requested fuel costs are an eligible increased operating cost. Therefore, this appeal is partially granted.

Appeal Letter

Appeal Analysis

Background

From February 24 to July 3, 2019, severe storms and flooding impacted areas in western Illinois.[1] The Penny Slough Drainage District (Applicant) requested Public Assistance (PA). The Applicant claimed that excessive rain and flooding overwhelmed its levee and drainage system and requested PA for various emergency protective measures. FEMA created Grants Manager Project 120779 to capture the Applicant’s claimed work and $225,992.69 in costs. FEMA issued a Determination Memorandum dated February 17, 2021, denying funding for the project, finding that the claimed work was not necessary to protect lives, safety or improved property. It additionally stated that because the Applicant was not engaging in eligible work when its equipment failed, the requests to repair and replace materials and equipment was also denied.

First Appeal

The Applicant submitted an appeal on April 15, 2021, arguing that the emergency pumping and associated costs were necessary to protect improved property. The Illinois Emergency Management Agency (Recipient) forwarded the appeal to FEMA, requesting FEMA take all submitted documentation into consideration. FEMA sent a Request for Information seeking fuel and maintenance costs incurred for the Applicant’s pumping equipment during the three years prior to the declared disaster. The Applicant provided, among other items, maintenance reports for the three years preceding the disaster. The FEMA Region 5 Regional Administrator partially granted the first appeal for $116,515.42 on October 3, 2022. FEMA found the documentation showed the U.S. Army Corps of Engineers, who provided a risk assessment letter, demonstrated that the leveed area was improved property and residents’ health and safety was threatened by flooding and levee failures during the declared disaster. FEMA determined that the Applicant had demonstrated that the emergency pumping was required to address an immediate threat to public health, safety, and improved property, and therefore eligible. However, FEMA found the Applicant had not demonstrated that $17,550.00 for unspecified contract labor costs and $91,475.06 in fuel costs were eligible, and therefore denied those costs.

Second Appeal

On November 28, 2022, the Applicant submitted a second appeal requesting FEMA find $91,475.06 in fuel costs eligible. The Applicant includes receipts and fuel logs showing predisaster fuel expenses for the three years prior to the disaster and states that the total fuel expenditure for the three-year period was $67,489.32. It also provides receipts showing fuel purchases totaling $91,475.06 made during the incident period. The Applicant withdraws its claim for $17,550.00 for unspecified contract labor, stating it does not have additional information with the level of detail requested by FEMA. The Recipient forwarded the Applicant’s appeal to FEMA on January 9, 2023, recommending that FEMA review all information that has been presented in considering this appeal.

Discussion

FEMA is authorized to provide assistance for emergency protective measures required due to an immediate threat resulting from the declared incident.[2] Generally, increased costs of operating a facility or providing a service are ineligible for PA funding, even when directly related to the declared incident.[3] There are some exceptions, including costs for fuel for increased use of a pumping station.[4] The additional costs are only eligible if (1) the services are specially related to eligible emergency actions to save lives or protect public health and safety or improved property; (2) the costs are for a limited period of time based on the exigency of the circumstances; and (3) the Applicant tracks and documents the additional costs.[5]

The Applicant claims $91,475.06 in fuel costs for pumps operated during the disaster’s incident period and on second appeal, provided receipts documenting the fuel costs dated between February 25 and June 24, 2019. The Applicant also provided fuel purchase logs and receipts for the three years prior to the disaster. The receipts for fuel purchased during the incident period demonstrate that the fuel costs were specifically related to eligible emergency work, for a limited duration, and adequately tracked and documented. Accordingly, the Applicant demonstrated $66,555.39 in additional fuel costs are eligible for PA funding. The eligible amount reflects the increased fuel usage during the incident period over the average usage from the same period in previous years.[6]

 

Conclusion

The Applicant has demonstrated that $66,555.39 in requested fuel costs are an eligible increased operating cost. Therefore, this appeal is partially granted.

 

 

[1] The President issued a major disaster declaration on September 19, 2019.

[2] Robert T. Stafford Disaster Relief and Emergency Assistance Act § 403, Title 42, United States Code § 5170b (2018); Title 44 Code of Federal Regulations (44 C.F.R.) §§ 206.223(a)(3), 206.225(a) (2018).

[3] Public Assistance Program and Policy Guide, FP 104-009-2, at 42 (Apr. 1, 2018) [hereinafter PAPPG].

[4] Id. at 61; FEMA Second Appeal Analysis, Ste. Genevieve Levee District #3, FEMA-4551-DR-MO at 3 (Aug. 4, 2022).

[5] PAPPG, at 60-61.

[6] FEMA conducted an analysis of the predisaster fuel cost documents provided by the Applicant. In the three years before this disaster, for the same timeframe as this disaster’s incident period, the Applicant used an average of 10,100.97 gallons of fuel. During this disaster’s incident period, the Applicant used a total of 37,078.60 gallons of fuel; 26,977.63 gallons more than average. From this overage, FEMA determined that $66,555.39 was the eligible increased operating fuel costs.