(PDF provides a complete and accurate display of this text.)
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.
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.
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
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
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
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
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
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:
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.
James L. Blum
(For June E. O'Neill, Director).
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,
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
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.
Richard W. Krimm,
Response and Recovery Directorate.