"No Company Need Be Unprepared"

Saturday, July 1, 2006 - 01:00

Editor: Akerman Senterfitt is somewhat unique among law firms in creating a special task force chaired by individuals with FEMA backgrounds to assist businesses before and after disasters. How many persons in the firm are involved in this effort?

Schumann: The Disaster Preparedness and Recovery Task Force includes fifteen practice areas and specialties, such as insurance coverage, design and construction defects, lobbying and governmental hearings, homeowner association claims, indoor air quality and water intrusion, surety law, construction liens, construction licensing regulation, class action suits, building codes, labor and employment issues, bankruptcy, tax, health, safety, FEMA, Homeland Security, and continuity planning.

We work together with 20 attorneys and consultants on this task force to service business owners, homeowner associations, private individuals, and state and local governments seeking federal contracts and FEMA work. We also provide counsel on proper recovery measures as well as preventative initiatives to avoid the same intensity in damage from a disaster.

Craig: The backgrounds of our Task Force members include work with FEMA and Homeland Security and, in the case of our attorneys, in the various practice areas mentioned above. It is a well-rounded group with a wide range of experience in both pre- and post-disaster events.

Editor: Please give our readers some information on your previous experiences.

Craig: From September 2003 until September 30, 2005, I was the Director of the Recovery Division at the Department of Homeland Security's Federal Emergency Management Agency ("FEMA"). My job included overseeing all of FEMA's grant programs post-disaster, including grants to individuals, private nonprofits and public entities. I started with FEMA as a regional director in Boston, which is one of ten regions. I was appointed the day before 9/11.

Prior to that, I worked at the U.S. Chamber of Commerce and the Rural Electric Cooperative Association, which is one of the unique grantees of FEMA post-disaster. I left FEMA on September 30, 2005, 30 days after Hurricane Katrina, and joined Akerman the first week in October.

Schumann: For three years, I was the former Director of Emergency Preparedness and Response (EP&R) Directorate at the U.S. Department of Homeland Security's Office of Legislative Affairs where I led the multi-billion dollar EP&R appropriations process for the four Florida hurricanes as well as Hurricane Katrina. Prior to my Homeland Security position, I spent seven years on Capitol Hill, six of which were with the Committee on Government Reform on the House side. Before that, I worked for Congressman Toby Roth of Wisconsin.

Editor: Where are your services available?

Craig: Our legal and consulting services related to FEMA, Homeland Security and all disaster preparedness and recovery efforts are available anywhere in the United States. Much of our business is currently on the Gulf Coast, but we also provide services to clients in high impact areas from our offices in Florida, New York, Washington, DC and Los Angeles, and throughout the country and across the globe.

Jim and I personally have worked on everything from the Special Disaster of 2003, to fires in California, to a bark beetle outbreak in Michigan that took down trees. We work full-time in the area of disaster prevention and protection, and we consult and work with legal members of our task force, depending on the expertise needed.

Editor: Give our readers an overview of the various forms of contingency planning which you offer businesses faced with the current hurricane season but which may equally apply to possible terrorist attacks.

Craig: There is not one specific plan that would apply to everyone. The various plans that businesses should adopt should protect their physical business and the data related to that business. For almost any business, particularly those in financial services, it is important that they have a backup plan to save their data along with alternate locations where that data can be copied and stored. There should also be a backup location where business operations can continue.

Schumann: The most important contingency planning is for employees. In addition to preparing data and operational backup, it is essential to prepare evacuation plans. It is also important to teach employees how to prepare a personal contingency plan to avoid work days out due to non-business related issues. A communications plan should be prepared for use in any emergency situation, providing a centralized method for communicating with employees in order to tell them whether they should come in to work or not. There should also be a pyramid phone log and a central 800 number where all employees can obtain information about the business.

In the case of hurricanes, there should be backup generators with a gas supply on hand. There should be cleaning supplies as well as food and water available in case you are isolated. We urge our clients to check those supplies every six months to a year.

Editor: Tell us what in particular applies to the construction industry under your Hurricanes Preparedness Policy and Procedure guidelines.

Craig: Post-hurricane, the different building codes in the state need to be considered. The industry needs to be aware of those codes, especially any new policies. It is important that the construction industry uphold high standards for rebuilding after a disaster, even exceeding the code's requirements where possible. By reviewing their contracts to make sure they meet building codes, they may ward off any class action or other suits if anything happens to their building.

Schumann: We can also help by ensuring that contractors and others understand FEMA's rules and regulations through the rebuilding process. It is helpful for them to understand what FEMA will pay for, what they will not pay for, and what has been done historically, which also helps the insurance companies involved. They can then get in front of FEMA to make their case so that the rebuilding goes more quickly, which is better for the community and companies that are rebuilding.

Editor: What new provisions has your firm suggested be added to construction project contracts?

Craig: Suggested contract clauses include: limitation or prohibition on escalation in prices related to a disaster; specifically addressing the definition of "adverse weather" and what is and what is not included for purposes of delay claims; limitations on delay claims; an owner's right to collect liquidated damages for unapproved delay; types of compensation for excused delay or work stoppages related to a disaster; and specifically for Florida properties, construction schedules incorporated into the contracts that take into account South Florida weather conditions.

Editor: Can businesses know in advance of a disaster what is covered by FEMA and obtain insurance that covers the areas not covered by FEMA?

Schumann: All businesses are encouraged to obtain private insurance to cover business continuity. FEMA does not customarily assist private companies, but does assist non-profits and public entities with their infrastructures. FEMA covers such non-profits as schools, museums, etc. If there are private buildings rented by government entities or nonprofits, and depending on the lease structure if they are liable for rebuilding as tenants, they could be eligible for FEMA grants. The construction industry, in dealing with FEMA on the reconstruction of public and non-profit institution buildings, must be aware of what FEMA will cover or will not cover.

Craig: The SBA does have a disaster loan program for businesses and homeowners. We have a client in Louisiana who was building a new manufacturing plant just before Hurricane Rita struck. It was important for that client to ensure that the local government was restored and that people were able to move back into the community as quickly as possible and for normal business operations to resume.

Editor: What can you do to help a business where the building code has changed remarkably since the building was erected?

Craig: If a building has been grandfathered in based on an earlier code, this is an area where FEMA has a mitigation grant program to retrofit a building to bring it to code. Also, if a building eligible for FEMA funding has been damaged in a disaster, FEMA will bring it up to new codes and standards through its grants.

Editor: What are you recommending businesses do to ward off labor and employment suits in the event of a near or complete shut-down of a business?

Schumann: According to our fellow Task Force member Jim Bramnick, who is head of our firm-wide labor and employment practice, in a near or complete shutdown of a business situation, the first thing to review is the applicability, if any, of the Worker Adjustment and Retraining Notification Act ("WARN"). In general, employers are covered by WARN if they have 100 or more employees. WARN requires a notice be sent to, among others, employees who are being adversely affected by a "plant closing" or a "mass layoff." One exception to the notice requirement is in the event of a natural disaster. In that situation, the employer must give as much notice as is practicable under the circumstances. It is critical to comply with WARN as the penalties include back pay and benefits to employees who did not get the proper 60 days notice, as well as potential per day fines for other non-compliance.

Additionally, if there is a collective bargaining agreement in effect between the employer and the union, it would be wise to negotiate with the union well before a disaster as to how an event will be handled.

Editor: What types of insurance coverage do you recommend?

Craig: We recommend that employers obtain business interruption insurance and secondary property insurance since the federal government only underwrites flood insurance. The general rule is that after a disaster, 50 percent of businesses will go out of business.

Editor: How do you interact with state and local regulatory agencies to provide financial relief after a disaster or to assure that all proper measures are taken before the disaster?

Craig: Depending on the state and who our clients are, we work closely with state agencies like the State of Florida Department of Community Affairs, of which the Department of Emergency Management is a part. If we have a client that is a local government or county government or nonprofit, we talk with the director and his or her team at the state level. In other cases, we talk with the state director of emergency management.

From our past positions with FEMA, we know many officials in emergency management at the state and local level. We will interact with them when storms are coming in and after the disaster to ensure that our clients are taken care of financially for everything they are eligible for. We also make sure that they are involved with local entities regarding reconstruction and future plans: for example, if there is mitigation in an area that will help a hospital build storm shutters to prevent the same amount of damage in future disasters.

FEMA gives a state about 7.5 percent of the overall cost of the immediate disaster to help mitigate against future disasters. So if a disaster costs a billion dollars, FEMA will give an extra 7.5 percent on top of that to the state to help diminish future loses. That covers things like storm shutters, raising buildings, relocating buildings out of flood plains, and buying out homes in flood prone areas to create parks.

Please email the interviewees at dan.craig@akerman.com or jim.schumann@akerman.com with questions about this interview.