Direct Result of Disaster

Appeal Brief

Appeal Letter

Appeal Analysis

Background

From October 27 to November 8, 2012, Hurricane Sandy caused severe damage throughout the State of New York.  The hurricane’s high winds, heavy rains, and storm surge caused flooding and damage to the City of Long Beach’s (Applicant) water distribution and sanitary sewer systems.  FEMA wrote Project Worksheet (PW) 3956 for $253,412.39 for work to repair the sanitary sewer system that included 92 “cut and cap” services performed between November 9, 2012 and July 17, 2013.  FEMA also wrote PW 4201 for $1,524,159.78 for work to repair the water distribution system that included 406 “cut and caps” performed between around October 28, 2012 and July 30, 2014.  A “cut and cap” terminates a residential water or sewer line that is no longer required (i.e., the resident needs to demolish or elevate the property).  In order to restore the water and sewer systems to their pre-disaster condition, the Applicant had to permanently cap off certain water connections and permanently shut off service to prevent flooding, freezing, or breaking of the lines in homes abandoned after the storm.  Additionally, the Applicant disconnected the service lines of damaged homes to prevent damage to water lines from demolition efforts.

On April 14, 2016, the New York State Division of Homeland Security and Emergency Services (Grantee), on behalf of the Applicant, requested a scope of work (SOW) change in PW 3956 for $167,928.07 to include 306 additional “cut and caps” performed from August 1, 2013 to March 23, 2016 for disaster damaged homes that were being elevated.  On April 20, 2016, the Grantee requested a SOW change for PW 4201 in the amount of $232,603.87 to include 193 additional “cut and caps” performed from August 28, 2014 to February 27, 2016 also for disaster damaged homes that were being elevated.  

In two letters sent January 10, 2018, FEMA denied the SOW change requests for both PWs, deciding the additional “cut and caps” were performed at the request of individual homeowners and were not required to complete the repair of the Applicant’s water and sewer systems.  FEMA also noted that the Applicant charged each homeowner a $500.00 fee to perform the service, which it offered during the normal course of its operations, before and after the disaster.  FEMA therefore considered the “cut and caps” an ineligible increased operating expense.

First Appeal

The Applicant filed first appeals dated March 6 and 7, 2018, stating that the “cut and caps” were required solely as a direct result of the damage caused by the disaster on properties that were determined to be irreparable or not safe for future storms.  The Applicant’s efforts to properly cut and cap the sewer and water services where home elevations were taking place ensured that the systems were not compromised—which would not have been necessary but for the storm.  The Applicant explained that the $500.00 fee charged was for administrative purposes only, pursuant to its city ordinance.

FEMA issued an initial Request for Information (RFI) asking for information related to the Applicant’s legal responsibility to perform the “cut and caps.”  The Applicant responded verifying its legal responsibility.  FEMA then issued a final RFI, requesting information to support that the “cut and caps” were required to repair disaster-related damage to the water and sewer lines.  The Applicant responded with a list of properties that received a “Substantial Damage” notice of determination resulting from the disaster.  These properties required repair or replacement, including elevation to comply with applicable floodplain management ordinances.  The Applicant and Grantee believed that this information further supported that the damage to the homes were the direct result of the disaster.

FEMA issued a first appeal decision on February 25, 2019, finding that the additional “cut and cap” services were ineligible increased operating expenses.  FEMA explained that the original “cut and cap” costs approved in PWs 3956 and 4201 were eligible as short-term additional costs directly related to accomplishing specific emergency health and safety tasks.  However, the additional “cut and cap” costs on appeal were conducted beyond the time period that FEMA considered short-term, up to three years after the disaster, and did not accomplish any specific emergency protective measures as a result of Hurricane Sandy.  FEMA also found that the “cut and caps” were not required to restore damaged sewer or water lines, but were conducted for private home demolition or elevation.

Second Appeal

The Applicant filed a second appeal via letter dated April 15, 2019.  The Applicant claims that FEMA arbitrarily defined what it considered “short-term” as it relates to the policy.  The Applicant states that it had to perform the work to prevent an immediate threat to health and safety.  The Grantee forwarded the Applicant’s second appeal on June 11, 2019.

Discussion

Direct Result of Disaster

Pursuant to Section 406 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, eligible applicants may receive Public Assistance (PA) funding for the repair, restoration, reconstruction, or replacement of a public facility damaged or destroyed by a major disaster.^[1]  In addition, federal regulations provide that for work to be eligible, it must be required as the result of a declared disaster.^[2] 

The initial “cut and caps” approved under PWs 3956 and 4201 were directly tied to the repair and restoration of the of the Applicant’s water and sewer systems and were performed during the time period immediately following the disaster necessary to restore the critical functions of these systems. For example, the SOW in PW 4201 describes the work needed to restore the water and sewer systems, “as part of the repair and restoration of the water distribution system to pre-storm conditions, these open ended water lines warranted permanent shut offs to maintain the pressure within the water system.”[3] It further explains that the Applicant “shut off service connections to prevent flooding and freezing or breaking of the lines in homes abandoned after the storm…and disconnected the service lines of homes which were damaged to prevent damage to the City water piping from demolition efforts.”[4]

In contrast, the Applicant’s April 2016 version requests indicated that the “cut and cap” services in question were requested by homeowners to assist with the elevation of residential structures related to future flood mitigation.  It explained that these “cut and caps” were the result of an “ongoing city project that will likely continue for several more years as the New York Rising assists homeowners with flood mitigation through house raising.”[5]

After the original work to repair the water and sewer systems was complete, the need for “cut and cap” services was no longer tied to the work required to repair the systems.  Although FEMA understands that individual homeowners assumed the responsibility to repair, demolish, or elevate their homes, those “cut and cap” services were directly related to the individual homeowner’s need.  They were not tied to the repair of the Applicant’s water and sewer systems and, therefore, are not eligible for PA funding.

Conclusion

The “cut and cap” services on appeal were performed based on the need of individual homeowners and were not tied to any repair or restoration work eligible for PA funding. Accordingly, the appeal is denied.