Category Archives: Federal Claims

County Mismanagement Leads to Staggering FEMA Debt

County Mismanagement Leads to Staggering FEMA Debt

Henderson County, Ill. failed to comply with all federal regulations during management of Public Assistance projects and is now faced with a staggering $471,791 debt to FEMA.

In 2008, Illinois was hit with historic flooding. One of the counties impacted–Henderson County, Ill.–received federal funding through the Public Assistance program. [1] However, a Department of Homeland Security audit in 2011 revealed that the county received $3.7 million in ineligible funds from FEMA due to its failure to comply with the federal laws and regulations in completing the work (not 1ahendmapnecessarily that the work itself was ineligible for funding). [2] The county was able appeal and reduce the debt significantly to $471,791; however, that is still a sizable debt for the County of approximately 7,000 residents and a $49,612 to repay. [3] In an effort to try and buy the county time, the County’s Board decided to deplete two emergency reserve funds, bringing the debt down to $316,791.

What is unclear is exactly why, but if the County does not pay the debt back by June 2017, the county faces the loss of several vital agencies such as the Health Department, Sheriff’s Office, and Transportation Services. What concerns the board is that after making this “good faith payment”, the county may not have the funds to respond to the next looming flood.

Whats Happening?

This case looks like a great example of a successful 1st Appeal–despite what it looks–reducing the County’s debt to FEMA 89%. The County is trying to use it’s elected representatives to find ways to further reduce the struggling community’s debt, find sources to pay the debt, and keep vital services open. What else could the County do? They could possibly work out a payment plan or do a 2nd Appeal to FEMA. A 2nd Appeal may or may not yield better results though. Additionally, counties can actually file for bankruptcy under Chapter 9 of the U.S. Bankruptcy code. If they do so, it would likely just be a reorganization of the debt, rather than a charge-off. [4]

No matter how this case pans out, it will be one to follow and watch the outcome of.

References:

[1] Elizabeth Meyer, County Depletes Two Emergency Reserve Funds as Good-Faith Effort at Denting FEMA Debt, The Hawk Eye (Sept. 28, 2016). See generally Fed. Emergency Mgmt. Agency, Disaster Declarations for Illinois, (Sept. 29, 2016) https://www.fema.gov/disasters/grid/state-tribal-government/55?field_disaster_type_term_tid_1=All (Three major disaster declarations were declared in 2008 for Illinois for Severe Storms and Flooding: 1800 in Oct. 3, 2008; 1771 in Jun. 24, 2008; and 1747 in Mar. 7, 2008).

[2] Elizabeth Meyer, County Depletes Two Emergency Reserve Funds as Good-Faith Effort at Denting FEMA Debt, The Hawk Eye (Sept. 28, 2016).

[3] Henderson Cty., Henderson County EDC Demographics, (2008) http://www.hendersoncountyedc.com/About-Henderson/Demographics.

[4] See 11 USCA §901 et seq; U.S. Courts, Chapter 9 – Bankruptcy Basics, (2016), http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-9-bankruptcy-basics (noting that the definition of a municipality under Chapter 9 of the Bankruptcy code is broad enough to include a County Government).

Texas Adds 20 Counties to the Presidential Disaster Declaration

Texas Adds 20 Counties to the Presidential Disaster Declaration

FEMA released the Presidential Disaster Declaration for 20 more counties Texas impacted by severe weather, tornados, and flooding the state has experienced since May 4th.

The Federal Emergency Management Agency released a statement regarding the Presidential Disaster Declaration for the State of Texas, adding twenty counties. The additional counties include: Bastrop, Blanco, Caldwell, Denton, Eastland, Fort Bend, Gaines, Guadalupe, Henderson, Hidalgo, Johnson, Milam, Montague, Navarro, Rusk, Smith, Travis, Wichita, Williamson and Wise. (This is in addition to Harris, Hays, and Van Zandt counties which received a disaster declaration late last month). As many may know the State has experienced severe storms, tornados, straight-line winds, and flooding since May 4th, and is still ongoing. The declaration makes grants available for temporary housing and home repairs, low-cost loans to cover uninsured property losses and other programs individuals and business owners can use to recover from the disaster’s impacts.

Individual Assistance (Households and Businesses)

The declaration makes grants available for temporary housing and home repairs, low-cost loans to cover uninsured property losses and other programs individuals and business owners can use to recover from the disaster’s impacts. For specifics on what you may qualify for it is important to visit www.disasterassistance.gov or call 1-800621-FEMA (3362). The toll-free number will operate between 7AM and 9PM seven days a week until further notice. Below are summaries of the programs available, it is important to note though, you must apply to FEMA for the assistance, it is not an automatically applied for you.

Rental Assistance for Temporary Housing: Initial assistance may be provided for up to three months for homeowners and at least one month for renters.  Assistance may be extended if requested after the initial period based on a review of individual applicant requirements.

Home Repair/Fixture Replacement Grants: Grants for home repairs and replacement of essential household items not covered by insurance to make damaged dwellings safe, sanitary and functional.

Immediate Personal Property Replacement Grants: Grants to replace personal property and help meet medical, dental, funeral, transportation and other serious disaster-related needs not covered by insurance or other federal, state and charitable aid programs.

Unemployment Compensation: Unemployment payments up to 26 weeks for workers who temporarily lost jobs because of the disaster and who do not qualify for state benefits, such as self-employed individuals.

Low Interest Loans for Uninsured Losses: Low-interest loans to cover residential losses not fully compensated by insurance.  Loans available up to $200,000 for primary residence; $40,000 for personal property, including renter losses.  Loans available up to $2 million for business property losses not fully compensated by insurance.

Low Interest Small Business, Non-Profit & Agricultural Loans: Loans up to $2 million for small businesses, small agricultural cooperatives and most private, non-profit organizations of all sizes that have suffered disaster-related cash flow problems and need funds for working capital to recover from the disaster’s adverse economic impact.  This loan in combination with a property loss loan cannot exceed a total of $2 million.

Low Interest Agricultural Property Loss Loans: Loans up to $500,000 for farmers, ranchers and aquaculture operators to cover production and property losses, excluding primary residence.

Other Miscellaneous Assistance: Crisis counseling, income tax assistance for filing casualty losses, legal advice assistance, veteran’s benefits, and social security matters.

Public Assistance

Federal funding has also been made available for some local governments and select non-profits (on a cost sharing basis) for emergency work and repair/replacement of facilities damaged by the severe weather and flooding. Local governments and select non-profits can find out more about application procedures at the federal and state applicant briefings hosted by recovery officials in the near future. Local governments can apply for assistance in:

Cost Sharing of Expenses from Lifesaving Measures Taken: Payment of not less than 75 percent of the eligible costs for emergency protective measures, including direct federal assistance, taken to save lives and protect property and public health. Emergency protective measures assistance is available to state and eligible local governments on a cost-sharing basis.

Cost Sharing of Repair/Replacement of Public Infrastructure: Payment of not less than 75 percent of the eligible costs for repairing or replacing damaged public facilities, such as roads, bridges, utilities, buildings, schools, recreational areas and similar publicly owned property, as well as certain private non-profit organizations engaged in community service activities.

Cost Sharing of Hazard Mitigation Projects During Recovery: Payment of not more than 75 percent of the approved costs for hazard mitigation projects undertaken by state and local governments to prevent or reduce long-term risk to life and property from natural or technological disasters.

Federal Judge Rules Federal Government Liable for Some Flooding From Katrina

Federal Judge Rules Federal Government Liable for Some Flooding From Katrina

Judge Braden of the US Court of Federal Claims ruled that the United States is liable for at least some flood damage during Hurricane Katrina in 2005.

Judge Susan G. Braden ruled that the United States is liable for at least some of the flood damage caused in during Hurricane Katrina on August 29, 2005 from the failure of the Mississippi River-Gulf Outlet canal. The Mississippi River-Gulf Outlet–nicknamed MR-GO– was linked to flood damage in the Lower Ninth Ward in New Orleans and damage to the nearby St. Bernard Parish. However, Judge Braden’s decision set a mediation hearing for May 6, 2015 in an alternative measure to determine how much government would be liable for.

Judge Braden praised the U.S. Army Corps of Engineers for being “open, transparent and helpful in educating the court to understand what happened” while simultaneously critical of the Department of Justice for “pursuing a litigation strategy of contesting each and every issue”.

Most importantly, this case is the first instance where the federal government was found liable for damage associated with flooding from Hurricane Katrina. Prior claims have been generally unsuccessful due to the government’s immunity for claims resulting from failed flood control projects.

The initial case (in 2006) was brought in the Federal District Court, for the Eastern District of Louisiana seated in New Orleans, and ruled that because MR-GO’s purpose was for navigation, rather than flood control, the damage was different. The 5th Circuit Court of Appeals overturned the district court’s decision and the U.S. Supreme Court denied certiorari (to hear the case).

Judge Braden’s decision relied on Arkansas Game & Fish Commission v. United States, allowing the Akransas Game & Fish Commission to recover under the takings clause since “recurrent flooding, even if [limited in] duration, are not categorically exempt from Takings Clause liability.” Ark. Game & Fish Comm’n v. United States, 133 S. Ct. 511, 516 (2012).

Mr. Joseph Bruno, a New Orleans lawyer who lost the initial case before the District Court in New Orleans said that note next question is whether the lawsuit will be expanded into a class action lawsuit.

– Will

Read the New York Times Article here.

St. Bernard Parish Gov’t v. United States, 2015 U.S. Claims LEXIS 526 (Fed. Cl. May 1, 2015).