In the Matter of TOWN OF ELIZABETHTOWN, NORTH CAROLINA

April 14, 2021

CBCA 7064-FEMA

In the Matter of TOWN OF ELIZABETHTOWN, NORTH CAROLINA

H. Goldston Womble, Jr. of Womble Law Firm, Elizabethtown, NC, counsel for

Applicant; and Patrick B. DeVane of Town of Elizabethtown, North Carolina,

Elizabethtown, NC, appearing for Applicant.

Kathryn Van Tol, North Carolina Division of Emergency Management, Raleigh, NC,

counsel for Grantee; and Todd Wright, Recovery Chief, North Carolina Division of

Emergency Management, Raleigh, NC, appearing for Grantee.

Charles Schexnaildre, Office of Chief Counsel, Federal Emergency Management

Agency, Department of Homeland Security, Baton Rouge, LA, counsel for Federal

Emergency Management Agency.

Before the Arbitration Panel consisting of Board Judges HYATT, LESTER, and

CHADWICK.

The North Carolina Department of Emergency Management (NCDEM) is the

recipient of a grant from the Federal Emergency Management Agency (FEMA) that allowed

subrecipients to seek public assistance (PA) funding from FEMA for disaster damage caused

by Hurricane Florence. NCDEM submitted an arbitration request with the Board upon behalf

of one of its subrecipients, the Town of Elizabethtown (the Town), pursuant to the authority

of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act),

42 U.S.C.A. § 5189a (West 2020). FEMA has requested that we dismiss this arbitration

matter as untimely filed because the Board did not receive the arbitration request until more

than sixty days after the Town had received FEMA’s decision denying the Town’s first-level

appeal. For the reasons explained below, we grant FEMA’s request.

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Background

The park and recreation facilities located at Lock and Dam #2 Park on the Cape Fear

River in North Carolina (the facilities) encompass 29.89 acres of federal land under the

jurisdiction of the United States Army Corps of Engineers (USACE). The Town holds a

long-term lease with the USACE through which the Town, as lessee, has assumed legal

responsibility for operation and maintenance of the facilities. The Town believes that, under

the terms of its lease, it is responsible for repairing any damage caused to the facilities.

Between September 7 and 29, 2018, heavy rainfall associated with Hurricane Florence

flooded the facilities. As a result of the hurricane, the President declared a major disaster in

the state of North Carolina (DR-4393-NC). The Town asserts that, after consulting with

FEMA’s program delivery manager and FEMA counsel, the Town paid to repair the

disaster-related damage at the facilities caused by Hurricane Florence.

The Town then requested PA funding as reimbursement for those repair and

restoration costs. FEMA ultimately denied the Town’s PA request. Based upon its

independent review of the Town’s lease with the USACE, FEMA found that the Town had

no legal responsibility for repairing disaster-related damage at the facilities or any other

damage that the Town did not itself cause. Consistent with the procedures set forth in

44 CFR 206.206 (2019), the Town filed a first-level appeal of FEMA’s denial with the

NCDEM on May 5, 2020, which the NCDEM forwarded to FEMA on May 22, 2020. FEMA

denied the first-level appeal on December 16, 2020. In its decision, FEMA notified the

Town of its right to file a second-level appeal, which, to be timely, the Town would have to

deliver to the NCDEM within sixty days of its receipt of the first appeal decision, and

notified the NCDEM of its obligation to forward any second-level appeal notice to the

Assistant Administrator of FEMA’s Recovery Directorate within sixty days of its receipt

from the Town. FEMA also notified the Town and the NCDEM that, in lieu of a

second-level appeal, the Town could seek arbitration before the Board, as follows:

Alternatively, this determination may be eligible for arbitration by the Civilian

Board of Contract Appeals (CBCA) under the arbitration rights set forth in

section 423 of the Stafford Act, as amended by section 1219 of the Disaster

Recovery Reform Act (DRRA), which was signed into law on October 5,

2018. To determine eligibility for arbitration, please review FEMA’s

Arbitration Fact Sheet. The CBCA regulations at 48 C.F.R. 6106.601 through

-.613 provide the CBCA’s rules of procedure for FEMA Section 423

arbitrations. Filing and procedural rules are available on the CBCA’s website

at www.cbca.gov. . . .

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If the [Town] elects to not submit a second appeal request or request for

arbitration within 60 days of the [Town’s] receipt of this letter, this decision

is the final agency determination on the matter, and the [Town] will no longer

be able to appeal or arbitrate the matter.

FEMA’s Motion to Dismiss, Exhibit 1 (footnote omitted).

FEMA attempted to deliver its first-level appeal decision to representatives for the

Town and the NCDEM by email on December 16, 2020. FEMA received a “read receipt”

acknowledgement from the NCDEM that same day, but received “undeliverable”

notifications for the emails sent to the Town’s representatives. After obtaining the name of

a new representative for the Town and updated contact information for him from the

NCDEM, FEMA resent the decision on December 17, 2020, but did not receive any receipt

acknowledgement. After again reaching out for a response, the Town’s representative

notified FEMA on December 29, 2020, that he had, at some unidentified point, received the

first appeal denial.

On February 10, 2021, the Town delivered a letter to the Director of the NCDEM

addressed to the Regional Administrator for FEMA Region IV, to be sent “through” the

Director of the NCDEM, requesting arbitration before the Board. The NCDEM forwarded

the Town’s arbitration request to the Board and to FEMA on March 4, 2021. After the Clerk

of the Board docketed this arbitration matter, FEMA filed a motion seeking dismissal of the

arbitration as untimely because it was filed with the Board more than sixty days after the

Town received FEMA’s first-level appeal decision. The Town elected not to respond to

FEMA’s motion, but the NCDEM filed an opposition.

Discussion

Under section 423 of the Stafford Act, an applicant “may submit a request for

arbitration after the completion of the first appeal under subsection (a) [of 42 U.S.C.A.

§ 5189a] at any time before the Administrator of [FEMA] has issued a final agency

determination . . . .” 42 U.S.C.A. § 5189a(d)(5)(B).1

FEMA’s regulations define if and when a FEMA first-level appeal decision becomes

a “final agency determination.” The Stafford Act provides that, once an applicant receives

its first-level appeal decision from FEMA, the applicant has sixty days within which to file

1

The Stafford Act also allows an applicant to file an arbitration request if FEMA

has not issued a first-level appeal decision within 180 days after receipt of the appeal,

42 U.S.C.A. § 5189a(d)(5)(B), but that provision is irrelevant to the circumstances before us.

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a second-level appeal. 42 U.S.C.A. § 5189a(a). Under FEMA’s regulations implementing

the Stafford Act, a subrecipient, like the Town, initiates a second-level appeal by “filing” its

second-level appeal request with the recipient, here the NCDEM, within sixty days after

receiving FEMA’s first-level appeal decision. 44 CFR 206.206(c)(1). If the subrecipient

files a second-level appeal notice, the recipient then has sixty days from the date that it

receives the subrecipient’s second-level appeal notice to forward it to FEMA. See 44 CFR

206.206(c)(2). If the subrecipient does not file a timely request with the recipient seeking

a second-level appeal, the first-level appeal decision automatically becomes the “final agency

determination” at the end of the first sixty-day period and is no longer subject to review.

Since the window for seeking arbitration closes if the subrecipient does not request

a second-level appeal within that first sixty-day period, the filing requirements for seeking

arbitration before the Board differ from the second-level appeal procedure. FEMA’s “Fact

Sheet for Public Assistance Appeals and Arbitration under the Disaster Recovery Reform

Act” requires that, rather than submit the arbitration request to the recipient who then is

responsible for forwarding it to FEMA, the subrecipient must submit the request for

arbitration simultaneously to the Board, FEMA, and the recipient within sixty days of

receiving the first-level appeal decision, thereby perfecting the arbitration request before the

first-level appeal decision becomes final. Under Board Rule 604 (48 CFR 6106.604), we

“follow[] applicable FEMA guidance implementing section 423 of the Stafford Act”

regarding procedures for the timely submission of an arbitration request.

The Town did not submit its arbitration request to the Board within sixty days of its

receipt of FEMA’s first-level appeal decision, as required by FEMA’s implementing

guidance. Even if we were to assume (without deciding) that the Town did not receive

FEMA’s first-level appeal decision until as late as December 29, 2020, the Town would have

to have submitted its arbitration request to the Board no later than March 1, 2021, to satisfy

the time limits identified in FEMA’s guidelines. It did not do so. The Town instead

submitted its request only to the NCDEM, assuming that the NCDEM would forward it

onward (as it eventually did after the sixty-day period for requesting arbitration had passed)

to the Board and FEMA in the way that it would for a second-level appeal. That procedure

does not work for an arbitration request. The Town’s failure to submit its arbitration request

to the Board within the sixty-day window renders its request untimely.

The NCDEM argues in its opposition to FEMA’s motion that the Board should excuse

the submission delay for two reasons: first, because it had never previously attempted to

submit an arbitration request and was unfamiliar with the process, it incorrectly but

reasonably assumed that the submittal and filing process was like that for a second-level

appeal, a mistake that should be excused; and, second, any late submission resulted from the

unavailability of NCDEM staff to process and forward the Town’s arbitration request in the

weeks after the Town asked the NCDEM to do so, and it would be unfair for the subrecipient

CBCA 7064-FEMA

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to be prejudiced by the recipient’s unintended delay. Granted, FEMA’s “Fact Sheet” could

have been clearer in making sure that subrecipients/applicants understand that the number

of entities to which they must deliver an arbitration request is larger than for a second-level

appeal notice. Nevertheless, the defenses that the NCDEM raises do not allow us to excuse

the untimely submission of the arbitration request to the Board.

Decision

For the foregoing reasons, this arbitration is dismissed as untimely filed.

Harold D. Lester, Jr.

HAROLD D. LESTER, JR.

Board Judge

Catherine B. Hyatt

CATHERINE B. HYATT

Board Judge

CHADWICK, Board Judge, writing separately.

I would reach the same result in a different way. The distinction is significant. The

first question in any arbitration is which issue or issues are arbitrable. When the right of

arbitration is created by a contract, one “should not assume that the parties agreed to arbitrate

arbitrability,” that is, to have the arbitration forum decide what to arbitrate, “unless there is

clear and unmistakable evidence that they did so.” First Options of Chicago, Inc. v. Kaplan,

514 U.S. 938, 944 (1995). I approach our statutory mandate in essentially the same way.

Congress authorized us to arbitrate “the eligibility for [public] assistance or repayment of

assistance provided.” 42 U.S.C.A. § 5189a(d)(1) (West 2020). I do not see in the statute an

authorization for us to decide whether a request for arbitration was timely.

I interpret Rule 604 to distinguish what would be covered by our procedures from

what would be covered by FEMA’s guidance. See 84 Fed. Reg. 29085, 29086 (June 21,

2019) (“The omission of a time to file an arbitration request is intentional. . . . The Board

interprets the statutory term ‘process’ [in 42 U.S.C.A. § 5189a(d)(5)] to mean the steps

established by FEMA for submitting a dispute to arbitration, including the timing and content

of an arbitration request. The proposed rule [604] thus defers to FEMA’s current and future

published guidance on those processing matters.”). Rule 604 does not say that we will

arbitrate disputes over timeliness. It says only that applicants should follow FEMA’s

guidance.

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Under our current authority, I do not intend to vote yea or nay when FEMA says an

arbitration request is untimely. I believe that determination rests on the “process” side of the

line that we drew in our arbitration rules, not on the “procedures” side. One might ask, but

what if FEMA starts acting unreasonably with respect to timeliness? My answer is the same

as for all of the other aspects of FEMA’s grant mission over which we lack arbitration

authority: A solution would need to lie elsewhere. We are not a court, and Congress did not

“suggest[] that the Board should review, sustain, or reverse” FEMA’s appeal decisions or

advise FEMA on its policies. 84 Fed. Reg. 7861, 7862 (Mar. 5, 2019). I would dismiss this

arbitration as untimely because FEMA says it is untimely.

Kyle Chadwick

KYLE CHADWICK

Board Judge