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Louisiana Department of Natural Resources ex rel. Coastal Protection and Restoration Authority v. Federal Emergency Management Agency

United States District Court, M.D. Louisiana

January 31, 2017

LOUISIANA DEPARTMENT OF NATURAL RESOURCES EX REL. COASTAL PROTECTION AND RESTORATION AUTHORITY
v.
FEDERAL EMERGENCY MANAGEMENT AGENCY

          RULING AND ORDER

          BRIAN A. JACKSON, UNITED STATES DISTRICT CHIEF JUDGE

         Before the Court is a Motion to Vacate Arbitration Order (Doc. 1) filed by the Louisiana Department of Natural Resources, through the Coastal Protection and Restoration Authority ("LDNR"). LDNR moves to vacate the arbitration decision rendered by the Panel in CBCA - 4984 - FEMA - In the Matter of Louisiana Department of Natural Resources, in which a panel of arbitrators upheld the Federal Emergency Management Agency's ("FEMA") denial of the LDNRs application for federal public assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act ("Stafford Act"). The Court has jurisdiction pursuant to 28 U.S.C. § 1331. For the reasons set forth below, LDNR's motion is DENIED.

         I. BACKGROUND

         On September 24, 2013, LDNR submitted a Project Worksheet Version Request 0 ("Public Assistance Request") to FEMA, seeking $586, 112, 000.00 to "restore the pre-Katrina/Rita stabilization features of the coastal barrier resource systems (CBRS) damaged by Hurricanes Katrina and Rita" under the Stafford Act. (Doc. 1-2; see also Doc. 1-4).[1] Specifically, LDNR sought the grant to repair damage caused by Hurricanes Katrina, Rita, or both, to 16 barrier islands or headlands in Terrebonne, Lafourche, Jefferson, or Plaquemines Parishes, Louisiana, by "restoring 28, 452, 707 cubic yards of sand" to the islands and headlands and by providing "337, 090 linear feet of sand fencing plus vegetation necessary to support and maintain the new sand." (Doc. 8 at p. 10; Doc. 1-4 at pp. 4 - 7).

         FEMA denied LDNR's Public Assistance Request by letter dated August 24, 2015, stating that "[t]he requested system of barrier islands and the individual components of that system are natural features; neither the system nor the individual components are improved and maintained." (Doc. 1-5 at p. I).[2] In the same letter, FEMA notified LDNR that it could "elect one of two remedies for resolution of its dispute." (Doc. 1-5 at p. 2). LDNR could either file a request to appeal FEMA's determination in accordance with 44 C.F.R. § 206.206, or it could, in lieu of filing an appeal, request arbitration of the matter before the Civilian Board of Contract Appeals ("CBCA Panel"), the statutorily designated arbitration authority, within 30 days of receipt of notice of FEMA's determination. (Doc. 1-5 at p. 2).

         LDNR requested arbitration of the denial, asserting that FEMA "failed or refused to meet its obligations to provide Public Assistance under the Stafford Act so that Louisiana's [Coastal Barrier Resource System] can be restored to its pre-storm condition." (Doc. 1-6 at p. 3). Specifically, LDNR argued (1) that FEMA's promulgated rules and regulations are inconsistent with and beyond the authority provided to it by Congress and, alternatively, (2) that even if the CBCA panel were to rule in favor of FEMA's interpretation of "public facility, " that it should still find that the "system" and/or the individual islands are natural features that have been improved and maintained as those terms are used in Subpart G. (Doc. 1-2 at p. 5). FEMA responded to LDNR's request on November 30, 2015, providing counterarguments to LDNR's position on the merits of its request and soliciting clarity from the Board "on the scope of the Board's review", asserting that the CBCA panel did not have legislative authority to rule on the validity of the definition of the term "facility" contained in FEMA's regulations. (Doc. 1-7 at p. 1; Doc. 8 at p. 13).

         On March 24, 2016, the CBCA panel dismissed the request for arbitration, concluding that "[t]he Louisiana barrier islands, as a system...[were] not 'built or manufactured, or an improved and maintained natural feature'" and therefore held that "[LDNR's] application as filed must be denied." (Doc. 1-10 at pp. 4 - 5). The panel also held that LDNR was entitled to "exercise its rights by making new, separate applications for grants for 'public facilities' on each of the islands for which it believes natural features were improved and maintained, seeking grants from FEMA in response to each of these individual applications." (Doc. 1-10 at p. 5).

         LDNR then filed a motion on April 22, 2016, asking the panel to reconsider and/or amend its decision on three grounds: "(1) the Panel did not consider and/or rule on all arbitral issues; (2) the Panel did not provide the State with an opportunity to present an oral presentation at a hearing as provided for in 44 C.F.R. § 206.209(h); and (3) the State and the Panel did not have all available evidence because FEMA...failed to respond to the State's FOIA requests." (Doc. 1-11). The panel denied LDNR's motion to reconsider, reiterating its earlier conclusion that the islands and headlands to which LDNRs application pertained were not "an improved and maintained natural feature" and rejecting LDNR's argument that the CBCA panel had not given LDNR the opportunity to make an oral presentation or to submit for review documents FEMA might produce in response to its FOIA requests. (Doc. 1-12).

         In response to the panel's conclusion on the motion for reconsideration and/or amendment, LDNR filed separate grant applications on individual islands that had been improved and maintained, in addition to filing the instant motion, in which it seeks to vacate the CBCA panel's reconsideration decision because: (1) the arbitration panel did not have all available evidence due to FEMA's failure to respond to LDNR's FOIA requests; and (2) the arbitration panel did not follow FEMA's promulgated rules that provide for a hearing. (Doc. 1-2 at pp. 1 - 2).

         II. DISCUSSION

         A. ARGUMENTS OF THE PARTIES

         In the instant motion, LDNR asks that the Court vacate the panel's refusal to reconsider its initial decision affirming FEMA's denial of benefits, asserting that (1) it was prejudiced by FEMA's failure to respond timely to its FOIA requests and by the panel's refusal to consider documents ultimately produced, and (2) that the panel's failure to hold a hearing on the merits prevented LDNR from presenting evidence and expert testimony in support of its position. (Doc. 1-2 at pp. 12 - 17). FEMA counters that because LDNR has not identified a reason that might have caused the panel to conclude that the islands and headland for which LDNR sought its grant were a "system" under 44 C.F.R. § 206.2019(c), LDNR has failed to meet its burden of showing that the documents and other proposed evidence in support of its position were "material." (Doc. 8 at p. 19). Further, FEMA asserts that LDNR has not demonstrated that it suffered "serious prejudice" either by the panel's alleged refusal to consider documents received by way of FOIA requests or failure to have oral argument. (Doc. 8 at p. 20). On these grounds, FEMA asserts that LDNRs motion should be denied.

         B. LEGAL ANALYSIS

         As both parties acknowledged in their respective memoranda submitted to the Court, the Federal Arbitration Act, 9 U.S.C. 10, et seq. ("F.A.A.") imposes significant limits on judicial review of arbitrator's awards so that arbitration will be an "efficient and cost-effective" alternative to litigation for the parties. Positive Software Sols., Inc. v. New Century Mortg. Corp.,476 F.3d 278, 280 (5th Cir. 2007) (en banc). Thus, judicial review of an arbitration decision is exceedingly deferential and vacatur is only available on very narrow grounds. Brabham v. A.G. Edwards & Sons Inc.,376 F.3d 377, 380 (5th Cir. 2004). Vacatur of an arbitrator's award is only available in the four limited circumstances listed in ยง 10(a) of the F.A.A.: (1) where the award was procured by corruption, fraud, or undue means; (2) where there was evident partiality or corruption in the arbitrators; (3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of ...


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