[House Report 104-359]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-359
_______________________________________________________________________


 
                       BENCHMARK RAIL GROUP, INC.

                                _______


 November 28, 1995.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

_______________________________________________________________________


 Mr. Hyde, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                        [To accompany H.R. 419]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 419) for the relief of Benchmark Rail Group, Inc., 
having considered the same, report favorably thereon without 
amendment and recommend that the bill do pass.

                                purpose

    The purpose of H.R. 419 is to compensate Benchmark Rail 
Group, Inc., for work which, except for a technicality under 
California State law, would otherwise have been paid for under 
the provisions of the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act.

                               background

    Immediately following the January 1994, earthquake in 
Northridge, California, the Southern California Regional Rail 
Authority (SCRRA) approached Benchmark Rail, Inc. (Benchmark) 
of St. Louis, Missouri about assisting in emergency repair work 
on rail lines in the Los Angeles area. Five days later, 
Benchmark was in California performing the work. Several weeks 
into the work, Benchmark learned of a provision of California 
State law which mandates that state agencies are allowed only 
to 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 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's contribution towards such repairs 
was 90 percent. Routinely, state and local governments or other 
public entities hire contractors to perform emergency repair 
work on specific projects. Following the approval by FEMA of a 
project, funds are obligated to the State (the grantee) for 
dispersal to other 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, funds in the 
aggregate amount of $27,517,779.00 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 $583,822.66. The 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 paid to Benchmark by the State of California or 
SCRRA.
    This legislation would give FEMA the ability to pay 
Benchmark Rail what both the State of California and FEMA agree 
it is owed. Because of the uncertainty that the State of 
California will change the state law, the bill directs FEMA to 
pay Benchmark the 10% usually paid by the state as well as the 
90% that is owed based on the public assitance provisions of 
the Stafford Act. In addition, it deobligates the amount 
obligated to the State of California for the work Benchmark 
perform.

                             agency report

    In an August 25, 1994, letter to Governor Pete Wilson, the 
Associate Director of FEMA for Response and Recovery 
Directorate stated that ``* * * 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).''
    Additionally, the letter stated that ``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.'' The letter gave two 
reasons why FEMA cannot pay Benchmark. 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.'' Secondly, the Stafford Act and 
applicable regulations authorize disbursement 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.''

                            committee action

    During the 103rd Congress, the Senate passed S. 2457 on 
October 4, 1994. This bill was identical to the now-pending 
H.R. 419. The House did not act on S. 2457 before adjournment 
of the 103rd Congress.
    In the 104th Congress, on July 13, 1995, the Subcommittee 
on Immigration and Claims favorably recommended the bill H.R. 
419, to the Judiciary Committee.
    On October 24, 1995, the Committee on the Judiciary 
favorably ordered reported by voice vote H.R. 419.

                      committee oversight findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         committee on government reform and oversight findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

               new budget authority and tax expenditures

    Clause 2(l)(3)(B) of House Rule XI is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               congressional budget office cost estimate

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives, the Committee sets 
forth, with respect to the bill, H.R. 419, the following 
estimate and comparison prepared by the Director of the 
Congressional Budget Office under section 403 of the 
Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, November 7, 1995.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 419, a bill for the relief of Benchmark Rail 
Group, Inc., as ordered reported by the House Committee on the 
Judiciary on October 24, 1995. The bill would require the 
Federal Emergency Management Agency (FEMA) to pay about 
$600,000 to Benchmark Rail Group (BRG), Inc., for emergency 
services performed under the Robert T. Stafford Disaster Relief 
and Emergency Assistance Act. We expect this outlay would occur 
in fiscal year 1996. Because the bill would increase direct 
spending, pay-as-you-go procedures would apply.
    H.R. 419 would require FEMA to compensate BRG for work it 
performed in the state of California after a 1994 earthquake. 
Because BRG was not licensed by the state, California is 
prevented from paying the company for its work, including 
paying out federal funds covered under the Disaster Relief Act. 
The bill would require that FEMA pay BRG directly for 
reimbursable cost covered under the Disaster Relief Act and for 
costs owed by the state of California.
    The bill also would require FEMA to deobligate an equal 
amount of disaster relief funds designated for payment to the 
state of California to cover the cost of the work performed by 
BRG. However, because California is prevented by law from 
paying BRG, FEMA would not have outlayed these funds under 
current law. Hence, enacting the bill would result in outlays 
that would not occur otherwise. CBO estimates that direct 
spending would increase by about $600,000 in fiscal year 1996.
    Enactment of H.R. 419 would not affect the budgets of state 
or local governments. Under state law, California cannot pay 
BRG, an unlicensed contractor, this bill would not require it 
to do so.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is John R. 
Righter.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).

                              agency views

    The comments of the Federal Emergency Management Agency 
concerning the claim of Benchmark Rail, Inc. are as follows:

                       Federal Emergency Management Agency,
                                Washington, DC, September 13, 1994.
Hon. John C. Danforth,
U.S. Senate,
Washington, DC.
    Dear Senator Danforth: This is in response to your letters 
of May 18, and July 12, 1994, to James L. Witt, Director, 
Federal Emergency Management Agency (FEMA), on behalf of your 
constituent, Mr. Steve C. Goggin, President of Benchmark Rail 
Group, Incorporated (Benchmark). Benchmark performed repair and 
restoration work at the request of Southern California Regional 
Rail Authority (SCRRA) soon after the Northridge Earthquake. 
However, due to complications arising from the fact that it did 
not have the required California license, it was unable to 
obtain reimbursement for its work.
    I apologize for the amount of time it has taken to respond 
in writing, but, as you know, we have been working diligently 
with the staffs of both your St. Louis and Washington D.C. 
offices in an attempt to achieve a successful resolution of 
this matter with the State of California. Indeed, your staff 
should be complimented on their efforts to seek legislative or 
executive measures through which Benchmark might be paid. As 
you requested, we have kept Karla Roeber of your St. Louis 
office informed of the outcome of our activities. It is 
unfortunate that our combined efforts to encourage the State of 
California to pay Benchmark did not meet with success. As you 
are aware, 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 came 
into play by way of applicable grant administration 
regulations.
    For your reference we have included a brief explanation of 
why FEMA is unable to effect payment to Benchmark. 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 eligible 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 is the 
case until Benchmark can be (and is) 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 Benchmark's obtaining payment for its work, FEMA 
may not legally do what the State of California, MTA and SCRRA 
cannot do. FEMA has, however, fully supported efforts of the 
State that would enable Benchmark to receive payment.
    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 responding to 
your constituent and again I apologize for the length of time 
it took to respond. If you need additional information, or if 
we may assist in other efforts to enable Benchmark to be paid, 
please have a member of your staff contact our Office of 
Congressional and Governmental Affairs.
            Sincerely,
                                  Richard W. Krimm,
                                        Associate Director,
                                 Response and Recovery Directorate.

                                
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