Homeland Security seeks to expedite Gulf Coast recovery through arbitration

Federal Emergency Management Agency officials are working out procedural guidance for an independent arbitration process that would resolve outstanding disputes over public assistance for projects undertaken as a result of hurricanes Katrina and Rita in 2005.

Homeland Security Secretary Janet Napolitano and FEMA Administrator Craig Fugate announced the new arbitration process last week in Washington. It will offer individuals and organizations in Alabama, Louisiana, Mississippi and Texas an alternative path toward resolving disagreements with FEMA over funding for recovery operations in excess of $500,000.

Applicants for public assistance who have been denied funding by FEMA or feel a project award is too small can continue to use FEMA's internal appeals process, or they can seek resolution through the new arbitration program.

FEMA expects to publish detailed rules governing the process and guidance for requesting arbitration in the Federal Register by the end of August.

Arbitration "will give us one more tool in our tool box for expediting Gulf Coast recovery efforts," Napolitano said.

Under the program, the government will create arbitration panels, each consisting of three judges from the General Services Administration's Civilian Board of Contract Appeals. As such, the judges will have considerable expertise in construction and contracting matters, and they also will have access to subject matter experts in engineering, architecture and other fields.

The arbitration panels' decisions will be final and binding.

Napolitano said arbitration would be quicker than the FEMA appeals process: "Indeed, we think most of these appeals [sent to arbitration panels] could be resolved in four to five months once they begin."

The alternative dispute-resolution process addresses a major concern of aid applicants, which is that the FEMA appeals process essentially asks agency officials to pass judgment on decisions made by colleagues.

"This arbitration option is essential because it will offer quick and fair rulings by a panel with experience in construction disputes on long-standing issues between the state and FEMA," said Paul Rainwater, executive director of the Louisiana Recovery Authority.

Sen. Mary Landrieu, D-La., endorsed the new process: "After years of waiting, literally thousands of projects will now have the means to move forward." Landrieu and Rainwater participated in the briefing with Napolitano and Fugate last week.

The arbitration process was authorized in the 2009 American Recovery and Reinvestment Act.