The Applicant has not demonstrated that its claimed costs for materials and FAL overtime are eligible costs in response to COVID-19. Appeal Letter SENT VIA EMAIL Eric D. Gibson Brad Good Director Controller Kentucky Emergency Management Louisville-Jefferson County 100 Minuteman Parkway Metropolitan Sewer District Building 100 700 West Liberty Street Frankfort, Kentucky 40601-6168 Louisville, Kentucky 40203 Re: Second Appeal – Louisville-Jefferson County Metropolitan Sewer District, PA ID: 111-U1V2C-00, FEMA-4497-DR-KY, Grants Manager Project (GMP) 701440/Project Worksheet (PW) 104 – Immediate Threat, Force Account Labor & Equipment Costs Dear Eric D. Gibson and Brad Good: This is in response to Kentucky Emergency Management’s (Recipient) letter dated July 6, 2024, which transmitted the referenced second appeal on behalf of Louisville-Jefferson County Metropolitan Sewer District (Applicant). The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s denial of Public Assistance funding for materials and force account labor (FAL) overtime costs incurred in response to the coronavirus (COVID-19) pandemic. As explained in the enclosed analysis, I have determined that the Applicant has not demonstrated that its claimed costs for materials and FAL overtime are eligible costs in response to COVID-19. Therefore, this appeal is denied. This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals. Sincerely, /S/ Robert M. Pesapane Director, Public Assistance Enclosure cc: Robert D. Samaan Regional Administrator FEMA Region 4 Appeal Analysis Background The coronavirus (COVID-19) pandemic resulted in a major disaster declaration for the state of Kentucky on March 28, 2020, with an incident period of January 20, 2020, to May 11, 2023. Louisville-Jefferson County Metropolitan Sewer District (Applicant), a special district government, provides wastewater treatment, stormwater/drainage management, and flood protection across the Louisville Metro area. The Applicant requested $5,176,156.92 in Public Assistance (PA) funding for various costs incurred in response to COVID-19, including $752,145.13 in costs for materials and force account labor (FAL) overtime. The Applicant’s requested costs were associated with materials that included COVID-19 wastewater test kits, lab coats and uniform rentals, access control system with cameras, and laptops and accessories. FEMA prepared Grants Manager Project 701440 to document the project. On March 27, 2023, FEMA sent the Applicant a Request for Information (RFI), asking for additional information regarding the eligibility of individual items. The Applicant replied, explaining that: (1) COVID-19 wastewater test kits were used to track the amount of the virus entering its facility, which the Applicant used as an early warning system for infection rates, communications, and virus tracking; (2) lab coats were purchased to protect employees engaged in wastewater testing, and required frequent changing to ensure that the virus was not transmitted via contact with wastewater; and (3) uniform rentals and related cleaning costs were necessary to protect employees and to align with Centers for Disease Control and Prevention recommendations. On June 29, 2023, FEMA issued a Determination Memorandum, denying $4,981,000.04 of the Applicant’s claimed costs, including $752,145.13 for materials and FAL overtime.[1] In regard to the Applicant’s claimed materials’ costs, FEMA found that the Applicant did not demonstrate that the materials purchased were related to eligible emergency actions but instead were part of the increased cost of providing the Applicant’s routine services in a COVID-19 environment. In regard to FAL overtime, FEMA explained that the Applicant requested funding for budgeted employees who were working overtime to cover shifts for other employees that were unable to work due to illness. Therefore, FEMA found the FAL overtime costs ineligible because the employees that needed to be backfilled were not performing eligible work. First Appeal On August 23, 2023, the Applicant submitted a first appeal, requesting $752,145.13 of the previously denied costs for materials and FAL overtime.[2] The Applicant asserted that all materials’ costs were related to eliminating or lessening immediate threats from COVID-19, that FAL overtime costs were required to ensure continuity of operations, and that it took reasonable actions to respond to the threat of COVID-19 in accordance with FEMA’s March 19, 2020 guidance.[3] The Applicant explained that the COVID-19 wastewater testing kits were necessary to ensure that treated wastewater was safe. The Applicant added that the access control system with cameras was necessary to protect its infrastructure from contamination, asserting that early in the pandemic, extra security was a reasonable measure. The Applicant stated that the laptops were required so that its employees could telework and maintain continuity of operations. Regarding its claimed FAL overtime costs, the Applicant stated that it paid budgeted employees to backfill for other employees who were absent either due to COVID-19 infection or some other COVID-19 related reason, as well as to maintain continuity of operations. The Applicant asserted that backfill employees were performing eligible emergency work as the Applicant’s operation of wastewater management lessens and eliminates immediate threats. On August 24, 2023, Kentucky Emergency Management (Recipient) transmitted the first appeal to FEMA, expressing its support. In a letter dated February 13, 2024, the FEMA Region 4 Regional Administrator denied the first appeal, finding that the Applicant did not demonstrate that the costs for materials and FAL overtime were associated with eligible work. FEMA explained that the Applicant did not demonstrate that its claimed materials were used for eligible emergency protective measures and instead were ineligible increased operating costs. Specifically, FEMA stated that the COVID-19 wastewater test kits were a preventative measure that did not address an immediate threat, that the lab coats and uniforms did not fall within the definition of eligible personal protective equipment (PPE) in FEMA policy, that it was unclear how the access control and cameras were used for the claimed purpose of protecting the Applicant’s infrastructure, and that the laptops were a precaution to continue the Applicant’s normal operations in a remote environment.[4] In regard to its claimed FAL overtime costs, FEMA explained that the Applicant’s supporting documentation did not specify emergency protective measures performed by its personnel, so FEMA could not distinguish COVID-19 related work from routine or ineligible tasks. Second Appeal On June 28, 2024, the Applicant submitted a second appeal, reiterating its previously raised arguments. The Applicant emphasizes that FEMA should find the COVID-19 wastewater testing kits to be eligible because they were used to test treated wastewater to ensure that it did not remain contaminated with COVID-19 before being released to bodies of water. The Applicant acknowledges that lab coats and uniforms are not listed in FEMA’s COVID-19 policies but asserts that they should be eligible here because of employees’ potential contact with contaminated wastewater. The Applicant explains that the access control system was necessary to monitor access to its facilities and asserts that it was a reasonable emergency protective measure to protect critical infrastructure from the threat of sabotage. The Applicant adds that out of its 650 employees, 356 had to quarantine due to COVID-19 and another 220 had to self-isolate, which represents a large percentage of its employees being out of work. The Applicant then acknowledges that it cannot provide timesheets of those employees being backfilled, so it is not possible to distinguish whether each employee was always performing emergency protective measures. On July 6, 2024, the Recipient transmitted the appeal to FEMA, expressing its support. Discussion Immediate Threat FEMA is authorized to provide assistance to eligible PA applicants for emergency protective measures to save lives and protect public health and safety.[5] For emergency protective measures to be eligible, the applicant is responsible for showing the work is required to eliminate or lessen an immediate threat resulting from the declared incident.[6] FEMA may only provide assistance in response to COVID-19 declared events in accordance with a COVID-19 specific policy.[7] Under FEMA’s COVID-19 policies, eligible emergency protective measures may include work and costs associated with COVID-19 diagnostic testing, screening and temperature scanning, cleaning and disinfection, communications of public health information, and the purchase and distribution of face masks and PPE.[8] PPE includes items such as N95 and other filtering respirators, surgical masks, gloves, protective eyewear, face shields, and protective clothing (e.g., gowns).[9] Increased costs of operating a facility or providing a service are generally not eligible, even when directly related to the incident.[10] The additional costs are only eligible if: (1) the services are specifically related to eligible emergency actions to save lives or protect public health and safety or improved property; (2) the costs are for a limited time based on the exigency of the circumstances; and (3) the applicant tracks and documents the additional costs.[11] It is the applicant’s responsibility to provide documentation to substantiate its claim as eligible and to clearly explain how those records support its appeal.[12] Here, the Applicant claims that its costs for materials were incurred in the performance of eligible emergency protective measures because its core function of wastewater treatment is essential to public health and safety. However, wastewater treatment is the Applicant’s normal, albeit essential, municipal function. It is not an emergency protective measure that is an immediate action to save lives and protect public health and safety in response to the declared incident, nor is it a necessary component of the provision of otherwise eligible emergency protective measures. Therefore, the Applicant’s claimed costs for materials are not associated with eligible emergency work and instead, are increased operating costs of operating its facilities. Specifically, the Applicant requests $155,743.00 for wastewater testing kits to conduct wastewater surveillance for the prevalence of COVID-19 in wastewater. While the surveillance of wastewater may provide data to inform other actions of state and local officials, the conduct of wastewater surveillance is not an eligible emergency protective measure in response to COVID-19; thus, the costs for the testing kits are ineligible. The Applicant also requests $7,441.52 for the purchase of lab coats ($864.24) and for uniform rentals and cleaning ($6,577.28), asserting that protected employees engaged in wastewater testing to ensure that the virus was not transmitted via contact with wastewater. While the O&O Policy and other FEMA COVID-19 policies recognize protective clothing as eligible PPE, the Applicant has not demonstrated that the lab coats and uniforms were worn in accordance with CDC guidance or that of an appropriate public health official to lessen or eliminate an immediate threat from COVID-19, nor that they were worn in the performance of eligible emergency work; thus, they are ineligible.[13] The Applicant requests $8,356.48 for an access control system with cameras to protect its facilities either from contamination or sabotage and $186,588.85 for laptops and accessories to allow its staff to telework to ensure continuity of operations. Here, the Applicant has not demonstrated that the extra security costs are associated with any eligible emergency work associated with COVID-19. Similarly, while the laptops and accessories may have helped the Applicant’s staff continue to perform their work functions in a COVID-19 environment, the Applicant has not demonstrated that they were associated with any potentially eligible activity in FEMA’s COVID-19 policies, or any comparable activity that eliminates or lessens an immediate threat from COVID-19.[14] Therefore, the Applicant has not demonstrated that its claimed costs for an access control system with cameras, laptops, and accessories are eligible for assistance. Finally, the Applicant’s request includes $6,643.52 for various items that the Applicant does not discuss in the second appeal. As a result, the Applicant has not demonstrated that these costs were used in the performance of eligible emergency work and are therefore ineligible. Force Account Labor & Equipment Costs For emergency work, generally only overtime labor costs for budgeted employees are eligible.[15] Overtime costs for backfill employees are eligible, even if the backfill employees are not performing eligible work, as long as the employees they are replacing are performing eligible emergency work.[16] FEMA policy defines a backfill employee as a replacement employee who performs the regular duties of other personnel.[17] FEMA may only provide assistance for FAL overtime costs that are directly tied to the performance of eligible work and adequately documented.[18] Here, the Applicant requests $387,371.76 for FAL overtime costs incurred by permanent employees who were working overtime to cover other permanent employees absent from duty due to quarantine or some other COVID-19 related reason. However, quarantining of employees does not constitute an eligible emergency protective measure under FEMA’s COVID-19 policies; thus, the FAL overtime costs of these employees are not eligible for reimbursement under provisions in FEMA policy applicable to backfill employees.[19] Alternatively, the Applicant claims that its employees who replaced the quarantined employees were performing eligible emergency protective measures. However, as discussed above, the Applicant’s claim that its core function of wastewater treatment is essential to public health and safety does not support that the work was eligible emergency work in response to COVID-19. Rather, the Applicant’s employees engaged in normal, albeit essential, municipal functions, rather than work required as a result of the declared incident.[20] Therefore, the Applicant has not demonstrated that the claimed FAL overtime costs are directly tied to the performance of eligible emergency protective measures. Conclusion