APPA weighs in on FEMA proposed rules tied to disaster grant closeout procedures

by Paul Ciampoli
APPA News Director
December 14, 2020

The American Public Power Association recently weighed in on proposed rules put forth by the Federal Emergency Management Agency (FEMA) related to disaster grant closeout procedures.

The Dec. 10 comments were submitted by Alex Hofmann, APPA’s Vice President, Technical and Operations Services.

“Every year, our member utilities critical facilities and infrastructure, including poles, lines, and transformers, are impacted by extreme weather events such as ice storms, fires, tornadoes, floods, hurricanes,” Hofmann noted.

When this damage comes as a part of a major disaster as declared by the President of the United States, public power response and recovery costs are eligible for reimbursement through FEMA.

These grants, authorized by the Robert T. Stafford Disaster Relief and Emergency Assistance Act and administered under FEMA’s Public Assistance Program, “can amount to tens of millions of dollars and are critical to the ability of our member utilities, cities, and towns to recover from disasters,” the comments said.

Therefore, FEMA’s development and application of the closeout procedures policy is of great interest to APPA.

FEMA’s proposal to allow unlimited tolling of the statute of limitations is not what Congress intended nor what the statute provides, APPA said in the comments.

FEMA argues that it can retain the right to toll the statute because seeking additional information “constitutes the beginning of an administrative action.”

However, the actual effect is to puts the grantee in a permanent state of limbo, APPA argued. “On the one hand the threat of clawback remains, but on the other, FEMA has taken no administrative action against which the grantee can seek relief.”

This is “precisely the kind of abusive situation” that Section 705(a) (Statute of Limitations) of the Stafford Act was intended to address, Hofmann wrote.

“It also subverts the fair trade-off intended by section 705(a) – the grantee must wait up to three years before it can be certain that FEMA will not take administrative actions to recover a public assistant grant; whereas FEMA has just three years to discover ‘an issue that the recipient and/or subrecipient needs to address’ and take administrative actions resulting from that issue.”

FEMA’s proposal “is all the more frustrating because it implies that as a regular course of business, FEMA will not really begin to review certified final expenditure reports until years after the fact and that grantees, when a request for information is made, should assume that they will have to wait more than three years to have such issues resolved,” Hofmann wrote.

“Again, that is not what Congress intended when it enacted section 705(a). What Congress intended was that FEMA would use the three-year period to complete its review of a completed report, to make requests for additional information, and to decide whether to seek administrative action.”

Moreover, there is nothing about the intended process — rather than the one proposed by FEMA — that puts FEMA at a disadvantage, the comments pointed out.

“For example, one of the more common reasons for taking administrative actions to recover is a grantee’s failure to adequately document a public assistance request. The intended process simply requires FEMA to decide sooner, rather than later, that a request is inadequately documented.”

APPA also argued in its comments that FEMA should not “re-open” a project after it has been approved and closed out to de-obligate funds.

Once FEMA has reviewed and closed a project, FEMA should not be allowed to later reopen the project to reverse these determinations to the detriment of a recipient or sub-recipient, the trade group said.

“Post approval and close out challenges to procurement should not be allowed, as proper procurement supports reasonableness of the costs, and FEMA’s closeout of a project includes confirmation that FEMA has determined a cost is reasonable – so procurement compliance at that point should be moot,” wrote Hofmann.