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Lawyers Journal

Natural disaster recovery: Lessons learned on the local level

On June 1, 2011, from approximately 4 p.m. to 10 p.m., severe thunderstorms and tornadoes touched down in Western Massachusetts, leaving a 39-mile path of destruction across nine local communities in Hampden and Worcester counties.1

The National Weather Service estimated the most significant tornado to be an EF 3 (winds between 135 and 165 miles an hour on the Enhanced Fujita Scale), with a maximum wind speed of about 160 m.p.h. and a maximum width of half a mile. The tornadoes destroyed homes, businesses and school buildings, as well as thousands of trees. Hundreds of people were injured, and there were four fatalities.2

Individuals, businesses, nonprofits and government property owners hardest hit by the storms will be awarded federal aid. The Federal Emergency Management Agency (FEMA) will provide aid in the form of reimbursement for much of the storm-related infrastructure damage, debris removal and emergency response costs incurred by local communities, eligible private nonprofit organizations and state agencies.

From this event and its aftermath, an attorney can learn how little they know about the applicable law concerning natural disasters. Getting up to speed is the first order of business.

This article is intended to provide an outline overview of the law as to public assistance to local governments and private nonprofits. This article does not address issues related to assistance for individuals. While tornadoes are not a common occurrence in Massachusetts, other natural disasters, such as hurricanes and blizzards, are a more common occurrence, often just as deadly, and likely to require legal advice to local government clients.

STATUTORY AND REGULATORY AUTHORITY

Public assistance (PA) is authorized by the Robert T. Stafford Disaster Relief and Emergency Assistance Act, applicable regulations and policies.3 Under section 406 of the act, FEMA will pay 75 percent of the eligible cost of permanent restorative work and for emergency work under section 403 and section 407 of the act.

The federal cost share may be increased from 75 percent to not more than 90 percent of the eligible cost of permanent work whenever a disaster is so extraordinary that actual federal obligations under the act, excluding FEMA administrative cost, meet or exceed a qualifying threshold under the regulations.4

ELIGIBILITY

To be eligible for public assistance, the applicant's facilities, and the work to be performed at those facilities, all must satisfy particular eligibility requirements in order to qualify for disaster relief.

Under applicable law, the applicant is the basis for eligibility. The applicant must be eligible for the facility to be eligible. The facility must be eligible for the work to be eligible. The work must be eligible for the cost to be eligible. Each is discussed in this memo.

Eligible applicants

There are four types: 1) state agencies; 2) local government entities; 3) private nonprofit (PNP) organizations, or institutions that own or operate facilities open to the general public and providing certain services otherwise performed by a government agency, such as education, utility, emergency, medical, custodial care and other essential governmental services; and 4) federally recognized Indian tribes.

Eligible facility

Any building, works, system or equipment built or manufactured, or any improved and maintained natural feature that is owned by an eligible public or private nonprofit (PNP) applicant, with certain exceptions.

The facility must: be the responsibility of an eligible applicant; be located in a designated disaster area; not be under the specific authority of another federal agency; and be in active use at the time of the disaster. Examples of eligible public facilities include: roads (non-federal aid); sewage treatment plants; airports; irrigation channels; schools; buildings; bridges and culverts; and utilities.

Eligible work

Work performed on an eligible facility must: be required as the result of a major disaster event; be located within a designated disaster area; and be the legal responsibility of an eligible applicant.

FEMA will not provide assistance when another federal agency has specific authority to restore or repair facilities damaged by a major disaster; for example, where federal highway funds may be available. If negligence by another party results in damages, assistance may be provided on the condition that the applicant agrees to cooperate with FEMA in all efforts to recover the cost of such assistance from the negligent party.5

No assistance is provided for damages caused by an applicant's own negligence through failure to take reasonable protective measures.6

All work requires documentation showing compliance with act requirements, as well as compliance with other federal laws protecting endangered species, historical interests and other special requirements, including: floodplain management, environmental assessments, hazard mitigation, protection of wetlands and insurance.7

Work is broken down by FEMA into several categories as either "emergency" or "permanent."

Emergency work includes8:

  • Category A: Debris removal, such as: clearance of trees, woody debris; certain building wreckage; damaged/destroyed building contents; sand, mud, silt and gravel; vehicles; and other disaster-related material deposited on public property and, in very limited cases, private property.
  • Category B: Emergency protective measures taken before, during and after a disaster to eliminate/reduce an immediate threat to life, public health or safety, or to eliminate/reduce an immediate threat of significant damage to improved public and private property through cost-effective measures.

Permanent work includes:

  • Category C: Repair of roads, bridges and associated features, such as shoulders, ditches, culverts, lighting and signs;
  • Category D: Repair of water facilities, including drainage channels, pumping facilities and some irrigation facilities. Repair of levees, dams and flood control channels fall under Category D, but the eligibility of these facilities is restricted;
  • Category E: Repair or replacement of buildings, including their contents and systems; heavy equipment; and vehicles;
  • Category F: Utility repair of water treatment and delivery systems; power generation facilities and distribution facilities; sewage collection and treatment facilities; and communications;
  • Category G: Repair and restoration of parks, playgrounds, pools, cemeteries, mass transit facilities and beaches. This category is also used for any work or facility that cannot be characterized adequately by Categories A-F.

Eligible costs9

Costs directly tied to the performance of work, including labor, materials, equipment and contracts awarded for the performance of eligible work are eligible.

Costs must be: reasonable and necessary to accomplish the work; compliant with federal, state and local requirements for procurement; reduced by all applicable credits, such as insurance proceeds and salvage values.

A cost is "reasonable" if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.

Reasonable costs can be established through: the use of historical documentation for similar work; average costs for similar work in the area; published unit costs from national cost estimating databases; and FEMA cost codes.

Applicants must adhere to all federal, state and local procurement requirements. Funding from two federal sources to repair disaster damage is considered a duplication of benefits. A state disaster assistance program is not considered a duplication of federal funding. Insurance proceeds, donated grants from banks, private organizations, trust funds and contingency funds must be evaluated individually to determine whether they constitute a duplication of benefits.

Contracts will normally be competitively bid unless one of the following instances apply: the item is available only from a single source; the awarding agency authorizes noncompetitive proposals; after solicitation of a number of sources, competition is determined inadequate; or the contract will eliminate or reduce an immediate threat to life, public health or safety.

A "statutory administrative allowance" is provided to lessen the financial impact of administering the disaster recovery effort, including preparation of the project worksheet, related field inspections, project applications, final inspection reports and final audits.

Necessary costs of requesting, obtaining and administering federal disaster assistance are covered by this allowance. No other administrative costs are eligible. Good fiscal management and record keeping are essential to controlling the indirect costs associated with FEMA-reimbursed projects.

PROCESS OVERVIEW


The PA program is implemented through a number of steps summarized here, but described in detail in FEMA publications on the websites previously cited. It begins with a preliminary damage assessment (PDA),10 as well as an immediate needs funding (INF) analysis11 and the identification of need for expedited payments.12 A PDA is performed to document the impact and magnitude of the disaster on individuals, families, businesses and public property, and to gather information for disaster management purposes. FEMA, the state and an applicant representative participate in this effort.

The information gathered during the PDA process is used to determine whether federal assistance should be requested by the governor and forms the basis for the disaster declaration.

Applicant's briefing

This is conducted by a representative of the state for potential public assistance applicants after an emergency or major disaster has been declared, and addresses application procedures, administrative requirements, funding and program eligibility criteria. Each applicant should send representatives from management, public works, finance and legal.13

Request for public assistance


This is the applicant's official notification to FEMA of the intent to apply for public assistance. The request for public assistance is available online at the PA forms library. Typically, the request form is submitted at the applicant's briefing. If an applicant is unable to submit the request at the briefing, the applicant must submit the form within 30 days of the date of designation of the area (county, parish, etc.) for public assistance.14 An applicant need not wait until all damage is identified before requesting assistance.

Assignment of the public assistance coordination (PAC) crew leader

Once the request has been forwarded to FEMA, the PAC crew leader is assigned to the applicant. The PAC crew leader serves as the applicant's customer service representative on PA program matters, and manages the processing of the applicant's projects.

Kickoff meeting15

This differs from the applicant's briefing conducted by the state at the onset of disaster operations, and is conducted by the PAC crew leader and designed to provide a much more detailed review of the PA program and the applicant's needs. The PAC crew leader also discusses insurance, hazard mitigation opportunities and compliance with environmental and historic preservation laws, including floodplain management issues, that could potentially affect the type and amount of assistance available and the documentation needed.

Project formulation


This is the process of identifying the eligible scope of work and estimating the costs associated with that scope of work for each project. A "project" is a "logical method of performing work required as a result of the declared event." The applicant is responsible for identifying all work that is required as a result of the disaster.16

The project worksheet (PW)


An applicant has 60 days following the first substantive meeting, which is usually the kickoff meeting with FEMA, to identify and report damaged facilities to FEMA. The PW is the primary form used to document the location, damage description and dimensions, scope of work and cost estimate for each project. It is the basis for the grant.17 The project worksheet and other FEMA forms are available online at www.fema.gov/government/grant/pa/forms.shtm.

Identifying the damaged facility and description of damage on the PW

The exact location of the damaged facility or area must be identified. Damage sustained as a direct result of the disaster event should be differentiated from pre-existing or non-disaster related damage. The specific cause of damage must relate to the incident for which the disaster was declared. It is important to completely describe the cause of damage because it can affect eligibility determinations.

Scope of work

This must be completely described and correspond directly to the cause of damage. The work should be specified as an action with quantifiable (length, width, depth, capacity) and descriptive (brick, wood, asphalt, timber deck bridge) terms. The scope of work should not be described only as "restore to pre-disaster design." If part of the work is completed prior to project approval, the work that has been completed should be distinguished from the work remaining.
If additional damage to the facility is found after the PW is completed, it is necessary to document that damage, show how the damage is disaster-related, and request a re-inspection by FEMA.

Cost estimate


FEMA may grant funds on the basis of actual costs or on estimates of work to be completed. The three primary methods for determining costs are: time and materials; unit cost; and contracts. FEMA uses a methodology called the cost estimating format (CEF) for large projects to better estimate the total cost of large projects. There are tables online which depict the hierarchy of preferred pricing, with actual costs for the eligible completed work favored first and R.S. means cost data favored least. (Go to www.fema.gov/government/grant/pa/resources and select from among the cost estimating format resources.)

Validation

The applicant may prepare PWs for small projects. Large projects are developed by the project specialist, working with the applicant, and are submitted directly to the PAC crew leader for review and processing.18

Improved projects


When performing permanent restoration work on a damaged facility, an applicant may decide to use the opportunity to make improvements to the facility while still restoring its pre-disaster function and at least its pre-disaster capacity. For example, the applicant may decide to lay asphalt on a gravel road or replace a firehouse that originally had two bays with one that has three. Projects that incorporate such improvements are called improved projects.19

Funding for such projects is limited to the federal share of the costs that would be associated with repairing or replacing the damaged facility to its pre-disaster design, or to the actual costs of completing the improved project, whichever is less.

Alternate projects

An applicant may determine that the public welfare would not be best served by restoring a damaged facility or its function. In this event, the applicant may use the PA grant for that facility for other eligible purposes. (See FEMA Policy 9525.13, alternate projects.)

The alternate project must serve the same general area that was being served by the originally funded project. The original facility must be rendered safe and secure, sold or demolished. If an applicant opts to keep a damaged facility for a later or another use, it will not be eligible for FEMA funding in a subsequent disaster unless it is repaired to meet codes and standards, and mitigation measures that would have been approved are applied.20

Administrative appeals (See 44 CFR §206.206)

The appeals process is the opportunity for applicants to request reconsideration of FEMA determinations regarding application for or the provision of assistance. There are two levels of appeal.

The first-level appeal is to the regional administrator. Massachusetts is in Region 1, and the address is:

Federal Emergency Mgmt. Agency
99 High St., 6th floor
Boston, MA 02110
(617) 956-7506

The second-level appeal is to FEMA headquarters. According to the website:

W. Craig Fugate, administrator
Federal Emergency Mgmt. Agency
500 C Street S.W.
Washington, D.C. 20472
(800) 621-FEMA (3362)

An online appeals database containing FEMA responses to applicant appeals for assistance is available at: www.fema.gov/appeals.

CLOSEOUT


The PA program is considered closed when FEMA assures that all of the grants awarded under the PA program for a given disaster meet the statutory and regulatory requirements governing the program. FEMA may conduct an audit of the program during or after grant closure. After an audit, FEMA can request reimbursement of previously disbursed grant funds.21

1The nine communities included Southbridge, West Springfield, Agawam, Springfield, Brimfield, Monson, Wilbraham, Sturbridge and Westfield.
2See MEMA Reports, vol. 10, Issue 6 (July 5, 2011), which can be found at www.mass.gov/eopss/docs/mema/mema-reports/mema-reports-10-6.pdf.
3The act can be found at 42 U.S.C. §§ 5121-5205. Regulations are published in Title 44 of the Code of Federal Regulations (44 CFR) Part 206 to implement the statute. Policies are written to apply the statute and regulations to specific situations and provide clarification on a range of issues. The FEMA Public Assistance Policy Reference Manual can be found online at www.fema.gov/government/grant/pa/9500toc.shtm. FEMA has also developed a series of standard operating procedures (SOPs) that provide guidance for FEMA, the state and applicants on the processes discussed in this chapter. SOPs are available at www.fema.gov/government/grant/pa/sop.shtm.
4The federal regulation as to cost sharing, found at 44 C.F.R. § 206.47, sets a qualifying threshold of $100 per capita of state population, adjusted annually for inflation using the Consumer Price Index for All Urban Consumers published annually by the Department of Labor for increased federal cost share and may even recommend up to one hundred percent (100 percent) federal funding for emergency work for a limited period in the initial days of the disaster irrespective of the per capita impact.
5See 44 CFR 206.223. Work must also be completed within deadlines to be eligible for reimbursement. The initial deadlines are established according to the type of work performed: Debris removal: six months; Emergency protective measures: six months; Permanent repair work: 18 months. See 44 CFR 206.204. Time extensions may be granted for extenuating circumstances. For debris removal and emergency work, an additional six months may be granted by the state. For permanent restoration work, an additional 30 months may be granted by the state. See 44 CFR 206.202.
6See 44 CFR 206.223.
7See Section 316 of the Stafford Act (Protection of Environment) 42 U.S.C. §5159; 44 CFR Part 10 (Environmental Considerations), 40 CFR Parts 1500-1508 (NEPA Regulations), Environmental Policy Memoranda, FEMA Policy 9560.1, dated Aug. 17, 1999, Public Assistance Guide, FEMA 322, pages 128-130 (www.fema.gov/government/grant/pa/pag07_t.shtm). See also 36 CFR 800 (Protection of Historic Properties) Section 106 of the National Historic Preservation Act Model Programmatic Agreement - Historic Review, FEMA Policy 9560.3, dated May 29, 2002, Public Assistance Guide, FEMA 322, pages 130-131.
8See Public Assistance Guide, FEMA 322, pages 66-87.
9See Office of Management and Budget Circulars A-21, A-87, Attachment A.C.2 and A-122. Public Assistance Guide, FEMA 322, pages 40-41, 51.
1044 CFR §206.202(d)(ii). See also Public Assistance Guide, FEMA 322, pages 89, 90, 94, 96, 107 and 111.
11Public Assistance Guide, FEMA 322, pages 90-91.
12Section 407(e) of the Stafford Act, (42 U.S.C. § 5173). Public Assistance Guide, FEMA 322, pages 90-91.
13Public Assistance Guide, FEMA 322, pages 64, 91-92.
1444 CFR §206.202(c). Public Assistance Guide, FEMA 322, pages 92, 93.
15Public Assistance Guide, FEMA 322, pages 89, 90, 94, 96, 107 and 111.
16See Definitions listed in 44 CFR § 206.201.
17See 44 CFR § 206.202(d). Public Assistance Guide, FEMA 322, pages 96-97 Public Assistance Applicant Handbook, FEMA 323, pages 17-33.
18Refer to FEMA Policy 9570.6, Standard Operating Procedures on Validation of Small Projects, and Public Assistance Guide, FEMA 322, pages 96, 106-108.
1944 CFR §206.203(d)(1) Public Assistance Guide, FEMA 322, pages 79, 110-111.
20Section 406 (c) of the Stafford Act , 44 CFR §206.203(d)(2) , Public Assistance Guide, FEMA 322, pages 79, 111-112, 134.
2144 CFR §13.50. Office of Management and Budget Circular A-110 Public Assistance (PA) Program Grants Administration Post Award Monitoring and Closeout Processes, FEMA Policy 8610.8, dated Aug. 29, 2006, Public Assistance Guide, FEMA 322, page 114.


Edward M. Pikula, the city solicitor for Springfield, is vice chair of the Massachusetts Bar Association's Public Law Section Council. He is also on the executive council for the City Solicitors and Town Counsel Association.

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