USACE Easements

Background

As a result of flooding between April 30 and May 4, 2010, floodwaters inundated the White House Utility District’s (Applicant) Water Intake Buildings and Cages Bend pump station.  FEMA prepared PWs 02340 and 03687 for $13,559 and $123,090 for the estimated costs to repair the respective facilities to pre-disaster condition.  The scope of work for the Water Intake Buildings included cleaning the heating, ventilation and air-conditioning units, replacing both the heat pump package unit and the condenser motor, and restoring the eroded berm.  At the Cages Bend pump station, the floodwater caused major damage to electrical components of the station’s system for Supervisory Control and Data Acquisition (SCADA), standby generator, sewage grinder, and pump controls as well as the pump motors.  During review of the PWs, FEMA contacted the U.S. Army Corps of Engineers (USACE) and discovered that the tracts for the two sites were within the USACE’s flowage easements for Old Hickory Lake.

In a December 9, 2010, letter to the Tennessee Emergency Management Agency (TEMA), FEMA’s Federal Coordinating Officer for FEMA-1909-DR-TN noted that FEMA had reviewed documentation of flowage easements and determined that the USACE’s “Consent to Easement” excludes the United States from all liability for flood damage.  Based on a legal review of the language, the letter stated that “no FEMA funds are available for grants in the areas covered by [USACE flowage] easements.”  The letter concluded that the eligible costs for PWs written for damaged facilities located in USACE easements would be reduced to zero.  Consequently, FEMA reduced the eligible costs for PWs 02340 and 03687 to zero and processed the PWs as ineligible for funding.

First Appeal

In a March 25, 2011, first appeal of FEMA’s denial of PW 02340, the Applicant claimed that the hold harmless provision of USACE Easement Agreement is not applicable to federal disaster assistance.  The Applicant emphasized that the intent of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. § 5121-5207 (Stafford Act) is to provide assistance in order to alleviate damage and suffering.  The appeal asserted that not only is federal liability unrelated to assistance authorized by the Stafford Act, but that the hold-harmless provision of  USACE easement should not even be considered by FEMA when evaluating the eligibility of disaster related work.  In a first appeal of PW 03687, also submitted on March 25, 2011, the Applicant stated that it is not aware of a “Consent to Easement” nor a hold-harmless provision for the pump station at Cages Bend, and that even if such a document existed, it would be irrelevant to the eligibility of the facility for Public Assistance.  The Applicant requested that FEMA reverse its decision and fund the repair of the pump station and water intake buildings.

In a letter dated March 6, 2012, the FEMA Region IV Regional Administrator denied the Applicant’s first appeals.  The Regional Administrator stated that the damaged facilities are located within a USACE flowage easement.  The easement provides USACE the right to flood the land and indemnifies the U.S. Government from liability for any damage resulting from the flooding of the land.  The flowage easement is bound to the property and automatically transfers to any subsequent owners.  As the flooding of the damaged facilities was caused wholly or partly by the USACE exercising its right to flood the land, the U.S. was not responsible for the resulting damage to the Applicant’s water intake buildings or the pump station.  The Regional Administrator reiterated the Federal Coordinating Officer’s statement that FEMA will not provide Public Assistance funding for damaged facilities located in USACE flowage easements because the hold harmless provision in the easement agreement reflects the U.S. Government’s intent that the risk of damage to the facility in the high-risk flood area should be borne by the owner rather than by the U.S. taxpayer.

Second Appeal

TEMA transmitted the Applicant’s May 30, 2012, second appeal of the two PWs to FEMA on August 13, 2012.  In the appeal letter, the Applicant states that the cause of the flooding and the hold harmless provision of USACE easements are of no consequence to the eligibility of facilities for Public Assistance funding under the Stafford Act.  The Applicant reiterates that FEMA’s use of the hold harmless provision to deny eligibility for disaster assistance for the damage to the water intake buildings is inconsistent with the intent of the Stafford Act.  Furthermore, the Applicant maintains that there is neither a “Consent to Easement” nor an associated hold harmless provision for the pump station at Cages Bend because the finished floor elevation of 452 feet above mean sea level is higher than the 451.2 foot contour line above mean sea level that serves as the controlling elevation for the easement.  In support of the appeal, the Applicant submitted a table of the elevations of the damaged equipment and architectural drawings of the pump station which identify the elevations of the structure and its components.  The Applicant requested that FEMA reverse its previous decisions and approved funding in the amount of $136,648.59 for PWs 02340 and 03687.

Discussion

The Applicant claims that the pump station is not located in the USACE flowage easement because the facility is higher than the controlling elevation of the easement.  Whereas, the pump station is in fact located in tract E-569-2-E, which is part of USACE flowage easement DA-40-058-ENG-1139, the Applicant is correct that the boundary of the easement as defined by the United States District Court judgment of April 13, 1956, refers only to “land lying entirely below the 451.2 foot contour line above mean sea level.”  The construction drawings of the Cages Bend pump station show that the finished floor elevation of the Cages Bend pump station is 452 feet above mean sea level. Therefore, as the facility is not located in a USACE easement, eligible disaster related damage to the facility is eligible for permanent work funding.

Documentation provided by USACE shows that the Applicant’s water intake buildings, located in tract A-105, are within USACE flowage easement DA-40-058-CIVENG-61-63.  Under this easement, issued on January 11, 1961, the USACE purchased from the original property owner the right to flood the land and the owner agreed to hold USACE and/or the U.S. Government harmless should USACE ever need to use the full capacity of its storage pool.  The agreement runs with the land and is binding on subsequent owners.

The hold harmless release clauses in USACE leases are contractual terms which preclude claims of liability against the United States for damages from the types of flooding contemplated in the clauses.  On their face, such clauses do not apply to federal grant assistance programs such as the FEMA Public Assistance program, and there is no extrinsic evidence establishing that parties to leases understood such clauses to preclude Stafford Act or other federal grant assistance.  As a policy matter, FEMA has the discretion to withhold disaster assistance for facilities which are understood by the lessors and lessees to be subject to intentional or natural repetitive flooding.  In addition, as a matter of policy, FEMA may consider the clauses in the leases both to evaluate the level of risk inherent in the property and as evidence of the state or local government’s awareness and acceptance of that risk.

In the past, FEMA has not provided Public Assistance funding for facilities located in USACE easements, in particular when the easement includes provisions that identify risk to the facility and limit liability of the Federal Government.  FEMA will maintain existing practice to deny assistance to facilities located in USACE easements where the language in the easement is clear that the applicant is responsible for any flood damage that occurs to its facilities due to USACE actions or inactions, and/or any other causes specified in the easement.  FEMA has decided to not provide Public Assistance funding for these facility costs, as the hold harmless provision in the easement agreement reflects the U.S. Government's intent that the risk of damage to the facilities in the high risk flood area would be borne by the owner rather than by the U.S. taxpayer.

Conclusion

Generally, FEMA does not provide permanent work assistance for the repair of facilities located in USACE flowage easements.  The Applicant’s water intake buildings are ineligible for FEMA assistance because the facility is located within a USACE flowage easement and is at high risk for repeated flooding.  Conversely, the Applicant’s pump station at Cages Bend is not located in a flowage easement.  Therefore, repair of eligible disaster damage to the pump station and its components that are above the easement’s controlling elevation of 451.2 feet above mean sea level are eligible for Public Assistance funding.