Categorizing Losses

IN THIS ISSUE This issue of Disaster Recovery Today® focuses on categorizing losses using the required FEMA categories. This is the third step in a nine-step process identified by Tidal Basin to respond to a declared disaster. Following a disaster, categorizing losses must be accurately performed to avoid future conflicts with FEMA. This issue breaks down the categories and describes how each is to be used. Your comments, suggestions and requests for back issues are always welcome. Categorizing Losses Using the Required FEMA Categories to Properly Handle Emergencies In a previous issue of Disaster Recovery Today®, the focus was on assessing and documenting losses caused by a disaster. If the event is of such magnitude that federal aid is declared, the losses are then categorized by the Federal Emergency Management Agency (FEMA) categories A through G. These categories are separated into two sections: Emergency Work (Categories A and B) and Permanent Work (Categories C through G). Distinguishing between Emergency and Permanent Work is important since FEMA considers a Subrecipient’s internal labor (force account) differently depending on which category the costs were incurred under; and in some instances, offers an enhanced cost share for Emergency Work. The focus of this issue is to define1 and discuss each FEMA category to provide a snapshot of how FEMA views 1Definitions in blue are provided from FEMA’s Public Assistance Program and Policy Guide (PAPPG) which can be found at Disaster Preparedness and Recovery Consulting

2 D I SAS T E R R ECOVE RY TODAY.COM • Eliminate immediate threats of significant damage to improved public or private property; or • Ensure economic recovery of the affected community to the benefit of the community-at-large. Private Property Debris Removal Debris removal from private property is the responsibility of the individual property owner. When it is in the public interest FEMA [only] approves Public Assistance (PA) funding for Public Protection & Disaster Relief (PPDR) if the Subrecipient demonstrates all the following with sufficient documentation: (a) Legal Authority and Indemnification FEMA accepts a written statement from an authorized Subrecipient official that: • Certifies the Subrecipient has legal authority and responsibility to remove debris from private property; • Cites all applicable sources of authority (law, ordinance, code, contract, etc.); and • Indemnifies the United States for any claim arising from the debris removal. (b) Public Interest The Subrecipient must demonstrate that the PPDR was in the public interest. This includes: • The basis for the determination that removing the debris from the private property locations requested was in the public interest. The determination must be made by the state, territorial, tribal, county, or municipal government’s public health authority or other public “… many decisions are made prior to FEMA’s arrival, so it becomes imperative to document and photojournal all activities.” a Subrecipient’s recovery. It is important to keep these categories in mind, as oftentimes it will take several weeks — sometimes months — before an event is declared as eligible and FEMA is on site. Category A—Debris Removal Public Interest Determination by FEMA • Eliminate immediate threats to life, public health and safety; or

T IDALBAS INGROUP.COM 3 entity that has legal authority to decide that disaster-generated debris on private property constitutes an immediate threat to life, public health, or safety, or to the economic recovery of the community at large. • The established, specific legal requirements for declaring the existence of a threat to public health and safety. Debris removal is historically a controversial issue when dealing with FEMA. There are concerns over where the debris came from, whether it was weighed properly, whether the contractor was procured in accordance with guidelines, etc. Unfortunately, many decisions are made prior to FEMA’s arrival, so it becomes imperative to document and photojournal all activities. A Subrecipient should attempt to do the following, until further direction is provided by the state and FEMA: • Photograph areas of heavy debris that are to be removed and processed. • Contract for debris removal on either a per ton or cubic yard basis. • Attempt, where possible, to limit removal activity until a clear scope of work may be defined. • Use force account personnel or contractors to monitor the debris removal activities. • Track force account hours and equipment by documenting who, what, when, where and why. Also describe types of equipment and how long it was used. • Gain a right-of-entry (hold harmless) agreement before removing debris from private property. • Read and become familiar with FEMA’s Public Assistance Program and Policy Guide (PAPPG) at It is not uncommon for FEMA to place “debris teams” in the field to monitor how a Subrecipient and their representatives (contractors) are handling debris removal. Often these teams will monitor and generate reports that are then submitted to the state and FEMA. It is imperative that Subrecipients receive copies of all such reports, in case determinations made in the field are in error. In larger scale disasters, the state and FEMA may also utilize the expertise of the United States Army Corps of Engineers (USACE) for planning, monitoring and providing guidance. 2

4 D I SAS T E R R ECOVE RY TODAY.COM Category B—Emergency Protective Measures General Measures to save lives, protect public health and safety, and protect improved property are eligible. To be eligible, emergency protective measures for the property must eliminate or lessen immediate threats of significant damage to improved public or private property through cost-effective measures. FEMA may require a certification by local, state and/or federal officials that a threat exists, including identification and evaluation of the threat and recommendations of the emergency work necessary to cope with the threat. Items that fall into Category B include: • Transporting and pre-positioning equipment and other resources for response; • Flood fighting; • Emergency Operations Center (EOC) related costs; • Emergency access; • Supplies and commodities; • Medical care and transport; • Evacuation and sheltering, including that provided by another state or tribal government; • Childcare; • Safety inspections; • Animal carcass removal; • Demolition of structures; • Search and rescue to locate survivors, household pets, and service animals requiring assistance; • Firefighting; • Security, such as barricades, fencing, or law enforcement; • Use or lease of temporary generators for facilities that provide essential community services; • Dissemination of information to the public to provide warnings and guidance about health and safety hazards using various strategies, such as flyers, public service announcements, or newspaper campaigns; • Searching to locate and recover human remains; • Storage and interment of unidentified human remains; and • Mass mortuary services. When considering Category B, it is important to recall the activities performed in preparing for a disaster. In the event of a hurricane, where an agency may have three to five days’ notice, eligible costs would typically start with the

T IDALBAS INGROUP.COM 5 activation of the Emergency Operations Center (EOC) and the evacuation itself. Additionally, costs incurred for boarding windows and sandbagging prior to an event would be eligible. Historically, Category B is controversial, since the terms immediate threat, cost effective and health and safety are somewhat subjective. Agencies view and respond to threats differently, whereas FEMA staff typically define threats identified in their written policies. In the above categories of work, we encourage our clients to do what is necessary to get back to normal. This serves two purposes: it allows you to get back to day-to-day operations as quickly as possible; and it demonstrates to FEMA that you are not acting solely because they are providing aid. Category C—Road Systems Repairs and Replacements The damage must be directly related to the disaster — it cannot be a pre-existing condition or caused by an event after the official period of incidence. Repairs to structures (bridges, etc.) may be made when the estimated repair cost is less than the estimated replacement cost, unless the structure is damaged greater than 50%. If a structure is damaged to the extent that repairs exceed 50% of the replacement costs, funding may be provided to replace the structure. The Subrecipient also may choose to make repairs, however, the funding provided will be limited to the cost of replacement. Road Repairs On gravel roads, the base need not be damaged to be eligible for major gravel replacement. Loss of gravel must be evident. Potholes and rutted surfaces must be proven to be a result of the disaster event. Paving Loss of paved surface is eligible. Alligatored surface is generally a sign of normal deterioration and is not eligible, unless proven to be exclusively disaster related. On-System Facilities Facilities funded by other federal agencies, such as the Federal Highway Administration (FHWA), are not eligible for permanent repair. Emergency measures are eligible on federal aid roads except where the Emergency Relief (ER) Program of the FHWA is activated. For further particulars, see FEMA’s Public Assistance Program and Policy Guide (PAPPG).

6 D I SAS T E R R ECOVE RY TODAY.COM Scheduled Replacement Facilities are not eligible if scheduled for replacement within the next 12 months using federal funds. As stated above, permanent repairs are not eligible on FHWA funded roadways. That being said, a Subrecipient may still do what is necessary to make the roadways safe and passable, however, the FHWA requires prior approval before permanent repairs. For the FHWA’s ER program to be activated, a state must have amassed extraordinary costs per the following: “Although there is no nationwide definitive monetary break point between what is considered routine and extraordinary repair expenses the FHWA has determined that eligible ER repair activities in a state in the range of $700,000 (federal share) or more are usually significant enough to justify approval of ER funds.”3 If the ER program is activated, the Subrecipient will need to segregate all activities, including emergency work, between federal aid and non-federal aid eligible roads. Since it may take several months for this program to be activated in a major event (hurricane, severe flooding, etc.), Subrecipients should begin this segregation immediately. More information on the FHWA’s ER program can be found at Category D—Water Control Facilities Levees and Dams If a levee or dam meets the definition of a flood control work, falling within the authority of the U.S. Army Corps of Engineers (USACE) or Natural Resources Conservation Service (NRCS), it is not eligible for permanent restoration. Drainage Channels The USACE or NRCS may be involved in some flood channels. In these cases, local drainage channels are not eligible. Man-made channels must show evidence of routine maintenance and will be restored to pre-flood hydraulic capacity. Appropriate documentation, including construction and maintenance records for the man-made channels should be placed in the permanent Subrecipient file. The documentation should include records demonstrating the pre-disaster condition of the channels. Natural Streams Debris removal from natural streams is not normally eligible for assistance. Only debris that causes a threat to life, public health and safety, or damage 3 Emergency Relief Manual (Federal Aid Highways) Interim Update, August 2003.

T IDALBAS INGROUP.COM 7 to improved property from a 5-year flood event is eligible. Work to protect improved property must have a favorable benefit-to-cost ratio. Any work in natural streams must also be closely reviewed and monitored to minimize undesirable environmental effects. Seeding and Sodding Seeding, grass, and sod will be eligible only when necessary to stabilize slopes and minimize sediment erosion or runoff. Debris Disaster-caused debris in catch basins and channels is eligible for removal when a clean pre-existing condition can be established. FEMA is particularly interested in Category D, as flooding is one of the costliest forms of disasters in the United States. Oftentimes, they will deny reimbursement for clearing and repairing those facilities that a Subrecipient does not keep maintained. A good example of this would be a drainage ditch that is laden with storm debris. Subrecipients may ask FEMA to provide funds to clear the debris from the ditch, however, if the ditch is not routinely maintained, then FEMA may deem the debris to be pre-event and/or caused by negligence. If the Subrecipient can show that they routinely keep the ditch clean through a normal maintenance schedule, then FEMA will typically find the debris eligible. When approaching Category D work, as with damage to federal-aid roadways, jurisdiction for repairs may reside with other agencies such as the USACE or the NRCS. More information on these agencies can be found at: USACE NRCS Category E—Buildings and Equipment Restoration Buildings are to be restored to pre-disaster design capacity in accordance with present codes and standards. “FEMA is particularly interested in Category D, as flooding is one of the costliest forms of disasters in the United States.”

8 D I SAS T E R R ECOVE RY TODAY.COM Use and Occupancy The building must have been in active use prior to the disaster. If only part of the building was occupied at the time of the disaster, or if the building was used for a less demanding function than its original purpose, then replacement will be made at the reduced size, or restoration will be limited to that required to resume the immediate pre-disaster use. Extensive Damage If repairs to a facility cost 50% or more of the cost of replacing the facility to its predisaster condition, the facility is eligible for replacement. This is known as the “50% Rule,” and is discussed in detail in FEMA’s Public Assistance Program and Policy Guide (PAPPG). Insurance Confirm and understand what insurance policies are presently in force. Insurance coverage pays first and remaining uninsured losses are eligible. If repair costs exceed $5,000, a general hazard insurance commitment will be required equal to the number of eligible damages. Repair costs for flood damages occurring to buildings and/or contents within the 100-year flood zone will be reduced by the amount that would have been available from a standard NFIP flood policy whether or not the facility was actually insured. Equipment Office equipment and furniture should be repaired if feasible or replaced with used or surplus, where available. Supplies Consumable supplies will be replaced to pre-disaster quantities. Vehicles Special equipment, such as two-way radios, is eligible. Blue Book prices should be used, and salvage taken. Check for comprehensive insurance. If repair costs exceed $5,000, an insurance commitment will be required equal to the number of damages. Grounds Grounds around buildings may be included with building structure if it is to be handled as a single project, except trees and other plantings, which are not eligible. Cleaning For buildings with light damage, cleaning and painting is eligible. As discussed in a previous edition of Disaster Recovery Today, FEMA and Subrecipients often disagree on building repairs, codes and standards, and equipment claims. The following should “If a Subrecipient is claiming an upgrade based on local codes or standards, they must be prepared to demonstrate that the standard existed prior to the event and that it is enforceable.”

T IDALBAS INGROUP.COM 9 be kept in mind when dealing with Category E losses: • While it is appropriate for FEMA to replace a piece of equipment with “like, kind and quality,” including a used item, such an item may not be readily available, thus a new item may have to be purchased. • FEMA must use the Cost Estimating Format (CEF) to determine repair costs for large projects. It is important for Subrecipients to work with FEMA in determining the correct cost factors such as an extraordinary demand caused by the event and the appropriate costs for materials, overhead and profit, etc. • If a Subrecipient is claiming an upgrade based on local codes or standards, they must be prepared to demonstrate that the standard existed prior to the event and that it is enforceable. • Locate and duplicate original building drawings/plans or major repair plans for submission to FEMA. • Photographs before, during and after are extremely valuable. Category F—Utilities Electrical Restore to pre-disaster design in the most economical manner. Extra pole structures are necessary at times to restore the function when erosion has destroyed stream banks, and ground clearance must be maintained over longer distances. Sewer Visual evidence of ground subsidence indicating infiltration into the pipe must be present. • Limited TV inspection is eligible when damage is apparent. Use of TV inspection to search for problems is not eligible. • Cleaning of disaster-related debris from sewer lines is eligible only when necessary to restore adequate functioning of the system in specific reaches when the pre-existing condition cannot be established. Revenues Loss of revenue is not eligible. Added costs or charges for providing regular utility services are not eligible (often referred to as increased operating costs). When dealing with utilities, a Subrecipient generally has two sets of costs: what was done immediately to restore service (Category B) and what was done as a permanent solution (Category F). In some cases, however, the immediate fix is the permanent solution.

10 D I SAS T E R R ECOVE RY TODAY.COM Historically, if the activity is conducted soon after the event, FEMA may conclude that it is an emergency measure. If a Subrecipient is using their own staff for the work, then only overtime is eligible. It is imperative that Subrecipients carefully articulate what was done and whether more work is required before a permanent solution is reached. Category G—Parks, Recreational, and Other Grass Grass and sod replacement is eligible if it is an integral part of the restoration of an eligible recreational facility. Trees Trees and other plantings are not eligible unless part of an engineered wetlands or slope stabilization project. Damage Estimates All structures and damage sites within a park may be included as a single project if repair or contract is being handled that way. They can be claimed separately, if desired. Beaches To be eligible, a beach must have been improved to a designed profile and regularly maintained prior to the disaster. Appropriate documentation should be

T IDALBAS INGROUP.COM 11 placed in the permanent Subrecipient file to show that the beaches were designed, constructed and routinely maintained. The documentation should include records showing when beach sand was last replaced and at what depths. Permanent restoration of the sand on natural beaches is not eligible. Historically, Category G has been the“catchall” category for permanent repair issues not addressed in the other categories. Repairs to such items as Subrecipientowned ball fields, golf courses, playgrounds, etc., fall within Category G. What often becomes confusing is when a park has a damaged facility within it such as public restrooms or picnic shelters. These damages can be addressed in either category E or G, depending on the decision of the Project Officer. The seven categories listed above were developed to implement the FEMA Public Assistance process. In theory, they correspond with existing departmental systems normally part of most Subrecipients’ organizational structure, e.g.: Category A - SolidWaste/Public Works Category B - Public Safety/Police/Fire Category C - DOT/Public Works Category D - Public Works Category E - Facilities/Public Works/ Risk Management Category F - Utilities/Public Works Category G - Parks and Recreation In most cases when an event occurs, an agency does what it must to achieve a safe environment, continue government services and restore normalcy as quickly as possible. As stated earlier, much of this is accomplished prior to FEMA’s arrival. Knowledge of how FEMA categorizes costs is not only crucial to the emergency manager, but to all prospective members of the recovery team.

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