[Congressional Record Volume 140, Number 142 (Tuesday, October 4, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 4, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                     RELIEF OF BENCHMARK RAIL GROUP

  The bill (S. 2457) for the relief of Benchmark Rail Group, Inc., was 
considered, ordered to be engrossed for a third reading, read the third 
time, and passed; as follows:

                                S. 2457

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. FINDING AND PURPOSE.

       (a) Finding.--The Congress finds that Benchmark Rail Group, 
     Inc., of St. Louis, Missouri, satisfactorily performed 
     emergency work after the Northridge earthquake, but has not 
     been reimbursed as a result of a technicality under 
     California State law.
       (b) Purpose.--The purpose of this Act is to fairly 
     compensate Benchmark Rail Group, Inc., for the work for 
     which, except for the technicality under California State 
     law, it would otherwise have been paid under the provisions 
     of the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act.

     SEC. 2. PAYMENT.

       (a) In General.--Not later than 30 days after the date of 
     enactment of this Act, the director of the Federal Emergency 
     Management Agency shall pay to Benchmark Rail Group, Inc., of 
     St. Louis, Missouri, an amount equal to the total amount owed 
     to Benchmark Rail Group, Inc., by the Federal Emergency 
     Management Agency and the State of California to compensate 
     Benchmark Rail Group, Inc., for the emergency work and 
     services performed at the request of the Southern California 
     Regional Rail Authority, to the extent that such work and 
     services are otherwise eligible for reimbursement under the 
     Robert T. Stafford Disaster and Emergency Assistance Act. The 
     payment shall be made from funds appropriated to implement 
     such Act.
       (b) Deobligation of Funds.--The Federal Emergency 
     Management Agency shall deobligate an equal amount to that 
     obligated previously for payment to the State of California 
     to cover the costs of work performed for the Southern 
     California Regional Rail Authority by Benchmark Rail Group, 
     Inc., after the Northridge earthquake which would have been 
     eligible for reimbursement under such Act.

  Mr. DANFORTH. Mr. President, S. 2457 provides relief to the Benchmark 
Rail Group, Inc., a company in St. Louis that performed emergency work 
following the Northridge earthquake and, because of a technicality in 
California State law, has not been reimbursed for that work.
  Immediately following the Northridge earthquake, the Southern 
California Regional Rail Authority [SCRRA] approach Benchmark about 
assisting in emergency repair work on rail lines in the Los Angeles 
area. Five days later, Benchmark was performing the work. Several weeks 
into the work, Benchmark learned of a provision of California State law 
which states that State agencies can only hire contractors licensed to 
do work in the State of California. While SCRRA and the State of 
California were satisfied with Benchmark's work, this provision of 
State law disqualified Benchmark from receiving payment.
  Section 406(a) of the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (P.L. 93-288, amended by P.L. 100-707) 
authorizes the Federal Emergency Management Agency [FEMA] to contribute 
at least 75 percent of the net eligible cost of repair, restoration, 
reconstruction, or replacement of public facilities. In the case of the 
Northridge earthquake, FEMA is contributing 90 percent of such repairs. 
Routinely, State or local governments or other public entities hire 
contractors to perform emergency repair work on specific projects. 
Following approval by FEMA of a project, funds are obligated to the 
State--the grantee--for dispersal to other public entities--
subgrantees--or directly to contractors. The funds may not be drawn 
down by the State for disbursement to a subgrantee or contractor until 
the work is completed and documentation supporting the associated costs 
has been submitted to FEMA.
  In the case of the Northridge earthquake, on August 23, 1994, funds 
in the aggregate amount of $27,517,779 were obligated by FEMA through 
two damage survey reports for various eligible repair/restoration 
projects undertaken by Metropolitan Transit Authority-related [MTA] 
transit districts, including SCRRA. Benchmark is owed approximately 
$500,000. The 90-percent Federal share of the work performed by 
Benchmark is included in this obligation. However, because of the 
provision of California State law, those funds cannot be awarded to 
Benchmark by the State of California or SCRRA.
  FEMA is very sympathetic to Benchmark's quandary. In an August 25, 
1994, letter to Gov. Pete Wilson, Richard W. Krimm, Associate Director 
of FEMA for Response and Recovery Directorate, wrote that ``it is our 
understanding that this company, Benchmark Rail Group of St. Louis, 
Missouri, traveled halfway across the country at the invitation of the 
Southern California Regional Rail Authority [SCRRA] to help people in 
dire need of assistance. This action was clearly an example of the 
concept of people-helping-people at work. The State should take 
whatever action is appropriate to facilitate reimbursement to Benchmark 
for these efforts, based upon dollars already obligated by the Federal 
Emergency Management Agency [FEMA].

  According to the letter, ``FEMA is precluded from directly paying 
Benchmark or otherwise effectuating or facilitating payment to 
Benchmark because of limitations imposed by both State and Federal 
law.'' It cannot pay Benchmark for two reasons. First, because ``the 
Federal Government, in the performance of its duties and 
responsibilities, cannot ignore or abrogate State law. Since the 
failure to have a particular California license is the obstacle to 
payment by the State, FEMA is not legally in a position to do what the 
State of California, the Metropolitan Transit Authority and SCRRA 
cannot do.'' Second, the Stafford Act and applicable regulations 
authorize reimbursement by FEMA only to the grantee of the Federal 
share of disaster assistance funds, which, according to section 406 (a) 
of the act, must be either ``a State or local government.'' In this 
case, the State is the grantee. Benchmark, a private company, ``is not 
an eligible grantee.''
  Like FEMA, the State of California recognizes the problem. This 
summer, Gov. Pete Wilson worked closely with the California State 
legislature in an attempt to amend California law to authorize payment 
to Benchmark. However, the effort got underway late in the legislative 
session and failed. On September 8, 1994, Governor Wilson wrote to FEMA 
that ``we are hopeful that this problem can be resolved if FEMA obtains 
the administrative flexibility to make the Stafford Act payment 
directly to Benchmark.''
  The legislation that I introduced would do just that. It directs FEMA 
to pay directly to Benchmark all that Benchmark is owed for its work in 
Southern California that is eligible for reimbursement. This includes 
the 90-percent share that FEMA would ordinarily reimburse to the State 
through the public assistance program, and the 10-percent share that 
the non-Federal entity would ordinarily contribute for reimbursement. 
The clause in the bill ``to the extent that such work and services are 
otherwise eligible for reimbursement under the Robert T. Stafford 
Disaster and Emergency Assistance Act'' is intended to mean that FEMA 
reimburses Benchmark for all work which is eligible for reimbursement 
under the Stafford Act, including both the 90-percent share that FEMA 
would ordinarily pay and the 10-percent share that the nonFederal 
entity would pay.

  I have required FEMA to reimburse all 100 percent because Benchmark 
is in trouble and my goal is to make the company whole. Until the 
payment issue is resolved, Benchmark has ceased operations. I have no 
idea when and whether the California State legislature will amend State 
law to permit Benchmark to be reimbursed.
  I believe that local and State governments should contribute a match 
for disaster assistance. Under ordinary circumstances, I would want 
FEMA to contribute 90 percent of the reimbursement and California (or 
the local rail authority) to contribute 10 percent. Under this 
legislation, FEMA must pay 100 percent. However, I think it is fair, 
and makes very good sense, for FEMA to recover the 10 percent share 
from the State or from the local rail authority after it reimburses 
Benchmark the full 100 percent.
  It is very unfortunate that in exchange for Benchmark's 
responsibility in responding to this emergency, it has had to endure a 
disaster of its own. This legislation will finally permit Benchmark to 
receive that which it is owed. I believe that we have a responsibility 
to make this happen, and I urge passage of this bill.
  I ask unanimous consent that the two letters I referred to be printed 
in the Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                                 Federal Emergency


                                            Management Agency,

                                  Washington, DC, August 25, 1994.
     Hon. Pete Wilson,
     Governor of California, State Capital, Sacramento, CA.
       Dear Governor Wilson: I am writing to encourage you to take 
     the appropriate actions to ensure that an out-of-state 
     company that performed emergency work in California without 
     required State licensing, following the Northridge 
     earthquake, can be compensated for the eligible work that was 
     performed.
       It is our understanding that this company, Benchmark Rail 
     Group of St. Louis, Missouri, travelled halfway across the 
     country at the invitation of the Southern California Regional 
     Rail Authority (SCRRA) to help people in dire need of 
     assistance. This action was clearly an example of the concept 
     of people-helping-people at work. The State should take 
     whatever action is appropriate to facilitate reimbursement to 
     Benchmark for these efforts, based upon dollars already 
     obligated by the Federal Emergency Management Agency (FEMA).
       The Benchmark Rail Group performed repair and restoration 
     work at the request of SCRRA soon after the Northridge 
     Earthquake. However, due to complications arising from the 
     fact that they did not have the required California license, 
     they have been unable to obtain reimbursement for their work.
       FEMA is precluded from directly paying Benchmark or 
     otherwise effectuating or facilitating payment to Benchmark 
     because of limitations imposed by both State and Federal law. 
     First and foremost, payment to Benchmark is prevented because 
     of the State's licensing requirement. Further restrictions 
     come into play by way of applicable grant administration 
     regulations.
       The Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act (Stafford Act--the enabling legislation for 
     our disaster assistance program) and applicable grant 
     administration regulations authorize the provision by FEMA to 
     the grantee of the Federal share of disaster assistance funds 
     for eligible subgrantee projects and costs. The State, as 
     grant administrator, then disburses these funds to the 
     subgrantee based on documented costs of eligible work. The 
     subgrantee then pays its contractors. In this case, the 
     subgrantee is the Metropolitan Transit Authority (MTA), an 
     umbrella organization for several transit districts, 
     including SCRRA.
       The provisions of the Stafford Act and the above-mentioned 
     regulations provide that funds will be obligated (i.e., made 
     available to the State) upon approval of a project by FEMA. 
     These funds may not, however, be drawn down by the State for 
     disbursement to the subgrantee until the work is completed 
     and documentation supporting the associated costs has been 
     submitted by the subgrantee. Accordingly, the State, as grant 
     administrator, may not disburse grant funds to the subgrantee 
     for work for which it has not incurred any costs, as would be 
     the case if Benchmark is not paid by the MTA.
       In addition, the provisions of the Stafford Act would 
     prohibit us from providing such funds directly to Benchmark, 
     since the company is not an eligible grantee. Beyond these 
     strict considerations of enabling legislation, the Federal 
     government, in the performance of its duties and 
     responsibilities, cannot ignore or abrogate State law. Since 
     the failure to have a particular California license is the 
     obstacle to payment by the State, FEMA is not legally in a 
     position to do what the State of California, MTA and SCRRA 
     cannot do.
       On August 23, 1994, funds in the aggregate amount of 
     $27,517,779 were obligated by FEMA through two Damage Survey 
     Reports (DSRs) for various eligible repair/restoration 
     projects undertaken by the MTA-related transit districts, 
     including SCRRA. This means that funds are now reserved and 
     available to the State (and represent the 90 percent Federal 
     share of eligible costs for the project) for reimbursement of 
     the subgrantee's eligible costs, subject to the scope of work 
     parameters set forth in the DSR and within the parameters of 
     State law. It is our understanding that work performed by 
     Benchmark is included within the scope of work recognized as 
     eligible in the Damage Survey Reports.
       We hope that this information is helpful in resolving 
     issues concerning the payment of the Benchmark Rail Group. 
     This is a unique situation that we have not encountered 
     before in response to this disaster. We support your efforts 
     to work with SCRRA, the Benchmark Rail Group and others to 
     resolve this unfortunate situation. We would appreciate it if 
     you would notify us when you reach a final resolution of this 
     matter. If I may be of further assistance, please feel free 
     to contact me.
           Sincerely,

                                             Richard W. Krimm,

                                               Associate Director,
                                Response and Recovery Directorate.
                                  ____



                                         Governor Pete Wilson,

                                Sacramento, CA, September 9, 1994.
     Mr. Richard W. Krimm,
     Associate Director, Response and Recovery Directorate, 
         Federal Emergency Management Agency, Washington, DC.
       Dear. Mr. Krimm: I received your letter regarding 
     compensation to Benchmark Rail Group for emergency repair and 
     restoration work done after the Northridge Earthquake.
       As you know, Southern California Regional Rail Authority 
     has taken the position that State law precludes it from 
     paying Benchmark since it did not have the required license. 
     Although an attempt was made to amend legislation late in the 
     legislative session to authorize payment to certain 
     unlicensed contractors who performed work in response to the 
     Northridge earthquake, no action was taken by the 
     Legislature.
       My office has been in contact with Senator Danforth 
     regarding this situation. We are hopeful that this problem 
     can be resolved if FEMA obtains the administrative 
     flexibility to make the Stafford Act payment directly to 
     Benchmark.
       Thank you for your assistance.
           Sincerely,
     Pete Wilson.

                          ____________________