FEMA Proposes Forgiving Some Community Disaster Loans

The Federal Emergency Management Agency (FEMA) has proposed an amendment to the regulations governing special community disaster loans (CDLs). The regulation submitted to the Federal Register today proposes procedures and requirements for the cancellation of CDLs under certain conditions.

Following Hurricanes Katrina and Rita, Congress provided additional loan authority to FEMA to assist communities impacted by the hurricanes. FEMA provided over $1.27 billion in Special CDLs to communities in Mississippi and Louisiana. At the time the loans were granted, Congress prohibited FEMA from forgiving any special CDLs.

The decision to change the rules came as a result of Secretary Napolitano's trip to the Gulf Coast earlier this month, and is part of a series of new initiatives put forth by the Department of Homeland Security to address the challenges facing the region, the department said.

The proposed regulation allows for the forgiveness of all or part of a community's special CDL if local government revenues following a disaster are insufficient to meet the operating budget for the local government.

"Tremendous progress has been made to help the Gulf Coast region recover, but it is abundantly clear that communities are struggling to meet the challenges faced by the economy and the remaining challenges posed by Hurricanes Rita and Katrina," said U.S. Homeland Security Secretary Janet Napolitano. "We look forward to hearing feedback on this proposal in order to maintain essential municipal services following hurricanes Katrina and Rita. With this effort, we are closer to helping our Gulf Coast communities rebuild, recover and get back on their feet."

FEMA is seeking comments from state and local officials, as well as the public, on the proposed forgiveness procedures. Comments should be submitted under docket ID FEMA-2005-0051 at www.regulations.gov. Comments may also be submitted to FEMA-RULES@dhs.gov or by mail to FEMA's Office of Chief Counsel, Room 835, 500 C Street, SW, Washington, D.C. 20472. Please note that comments submitted via mail typically experience a two-week delay. Please reference Docket ID FEMA-2005-0051 when submitting comments. Comments can be submitted for 60 days after the rule is published. More information regarding the proposed rule is available in the docket at http://www.regulations.gov

Once comments are adjudicated, FEMA will issue a final regulation establishing the Special CDLs forgiveness procedures. FEMA cannot begin accepting forgiveness applications or begin forgiving loans until that final rule goes into effect.