Federal Disaster Agency Rejects $306 Million Request for Oroville Spillway Reimbursement

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The rebuilt Oroville Dam spillway, pictured in January 2019. The effort to rebuild the structure and reinforce the adjoining emergency spillway has a current cost estimate of $1.1 billion.  (Kelly M. Grown/California Department of Water Resources)

Updated Monday, March 11

The Federal Emergency Management Agency has rejected a $306 million reimbursement request from the California Department of Water Resources for work to restore Oroville Dam's shattered main spillway.

The state agency says it will appeal the decision, made earlier this week. The State Water Contractors, the consortium of local and regional water agencies that get supplies from Oroville and could be on the hook for spillway work FEMA doesn't cover, said it believes the project qualifies "for full federal assistance."

The rejection comes as construction crews near completion of a two-year project to replace the spillway, which began to disintegrate during water releases in February 2017, and reinforce a severely eroded adjoining hillside that was meant to serve as an emergency spillway.

The spillway failure triggered the emergency evacuation of about 188,000 people from communities downstream of Oroville Dam.

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The crisis at the nation's tallest dam prompted a presidential disaster declaration -- and opened the way for the state to apply for reimbursement of the cost of the spillway replacement project -- an undertaking with a current cost estimate of $1.1 billion.

FEMA, which can pay 75 percent or more of qualifying expenses for disaster recovery efforts, has reimbursed the state for $333.4 million of its costs to date. That includes $128.4 million granted last year for the initial emergency response to the disaster and $205 million announced this week to pay for replacing the lower portion of the massive concrete spillway.

But FEMA says it rejected another $306.4 million in costs submitted by DWR for replacing portions of the main spillway's upper section because independent reviews found the structure suffered from flaws before the onset of winter storms and water releases that preceded the 2017 failure.

"Two separate independent engineering reviews indicate that a variety of problems existed at the dam prior to the February 2017 floods," said FEMA Region 9 spokeswoman Brandi Richard in an email Friday. "FEMA’s public assistance can only fund work directly linked to the declared disaster, and so the grant assistance request ... was not approved for the upper gated spillway."

Richard didn't elaborate on which reviews FEMA consulted before reaching its determination. But a series of studies -- including one by a forensic panel DWR appointed at the direction of federal energy regulators and an independent inquiry led by Robert Bea, a retired UC Berkeley civil engineering professor and expert on systems failures -- found that the spillway structure suffered from a wide range of design, construction and maintenance problems. Some of the issues dated back to the 1960s.

Rep. Doug LaMalfa, a Republican who represents the Oroville area and much of the region evacuated in 2017, issued a statement Friday saying FEMA's decision "should not come as a total surprise."

"FEMA has reimbursed the state for eligible emergency repairs, but repairs due to maintenance failures as well as the new structures being built are ineligible for federal reimbursement legally," LaMalfa said. "... We don’t want FEMA to come up short on other disaster assistance by misapplying funds in this case of dam mismanagement, born out in the forensic report.”

Assemblyman James Gallagher, R-Yuba City, who also represents the area, sounded the same note on Twitter.

Department of Water Resources spokeswoman Erin Mellon said in an email Friday that FEMA is expected to submit a full explanation of the denial later Friday in a memo to CalOES, the governor's Office of Emergency Services.

"Once we receive the memo, we anticipate we will work with FEMA to provide additional information as part of the appeal process," Mellon said.

The State Water Contractors, which represents 27 water districts from Yuba City to the Mojave Desert that get at least part of their supply from the Oroville facility, said it believes the spillway work should be covered by federal authorities.

"We understand that DWR worked directly with the Federal Energy Regulatory Commission, U.S. Army Corp of Engineers and multiple independent experts to determine the appropriate actions necessary to repair the facilities and ensure the structure could operate as originally intended," Jennifer Pierre, SWC general manager, said in a statement Friday.

“That is why we support DWR’s decision to appeal the partial FEMA reimbursements. We firmly believe that federally-required repairs to Oroville after a federally-declared emergency should qualify for full federal assistance.”

This story was updated to include a comment from the State Water Contractors.