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DHS/FEMA

RIN: 1660-AA44

Publication ID: Fall 2008

Title: Special Community Disaster Loans Program
Abstract: FEMA would amend its regulations to implement loan cancellation provisions for Special Community Disaster Loans (Special CDLs) which were provided by FEMA to local governments in the Gulf region following Hurricanes Katrina and Rita. This proposed rule would not automatically cancel all Special CDLs, but would propose the procedures and requirements for governments who received Special CDLs to apply for cancellation of loan obligations as authorized by the U.S. Troop Readiness Veterans Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 (Troop Act). With the passage of the Troop Act, FEMA has the discretionary ability to cancel Special CDLs subject to the limitations of section 417(c) of the Stafford Act. Under section 417 of the Stafford Act, FEMA is authorized to cancel a loan if it determines that "the revenues of the local government during the full three fiscal year period following the disaster are insufficient to meet the operating budget for the local government, including additional unreimbursed disaster-related expenses for a municipal operating character." Since the cancellation provisions of section 417 of the Stafford Act already exist in the Traditional CDL Program regulations at 44 CFR 206.366, and section 417 of the Stafford Act provides the basis for cancellation of loans under both the Special CDL Program and the Traditional CDL Program, FEMA would propose to mirror the Traditional CDL cancellation provisions for Special CDLs. This rule would not affect the cancellation provisions for the Traditional CDL Program.
Agency: Department of Homeland Security(DHS)	Priority: Economically Significant
RIN Status: Previously published in the Unified Agenda	Agenda Stage of Rulemaking: Proposed Rule Stage
Major: Yes	Unfunded Mandates: No
CFR Citation: 44 CFR 206
Legal Authority: 42 USC 5121 to 5207

Legal Deadline: None

Statement of Need: This rulemaking is needed to address the needs of the communities affected by Hurricanes Katrina and Rita in 2005. The Community Disaster Loan Act of 2005 (Pub. L. 109-88) authorized FEMA to transfer $750 million from the funds appropriated in the Second Emergency Supplemental Appropriations Act To Meet Immediate Needs Arising From the Consequences of Hurricane Katrina, 2005, (Pub. L. 109-62), to provide up to $1 billion in loan authority. The Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006 (Pub. L. 109-234), authorized an additional $371,733,000 in loans authorized under the Community Disaster Loan Act of 2005. The U.S. Troop Readiness, Veterans Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, (Pub. L. 110-28) removes the loan cancellation prohibitions contained in the 2005 and 2006 Acts.

Summary of the Legal Basis: This rulemaking is authorized by the Community Disaster Loan Act of 2005 (Pub. L. 109-88), the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006, (Pub. L. 109-234), and the U.S. Troop Readiness, Veterans Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 (Pub. L. 110-28).

Alternatives: The alternative to this notice of proposed rulemaking would be to finalize the interim rule for the Community Disaster Loan Act of 2005 without adding in a provision for cancellation of Special Community Disaster Loans. FEMA is not in favor of that alternative. The public will be afforded an opportunity to provide comments on the proposed loan cancellation provisions authorized in the U.S. Troop Readiness, Veterans Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 (Pub. L. 110-28) when FEMA publishes the rulemaking in the Federal Register.

Anticipated Costs and Benefits: The overall impact of this rule is, therefore, the cost to the applicant to apply for the cancellation, as well as the impact on the economy of potentially forgiving all Special Community Disaster Loans and any related interest and costs. The maximum total economic impact of this rule is approximately $1.3 billion. However, without knowing the dollar amount of the loans that may be cancelled, it is impossible to predict the amount of the economic impact of this rule with any precision. Although the impact of the rule could be spread over multiple years as applications are received, processed and loans cancelled, the total economic effect of a specific loan cancellation would only occur once, rather than annually.

Risks: This action does not adversely affect public health, safety, or the environment.

Timetable:

Action	Date	FR Cite
Interim Final Rule	10/18/2005	70 FR 60443
Interim Final Rule Effective	10/18/2005
Interim Final Rule Comment Period End	12/19/2005
NPRM	02/00/2009

Regulatory Flexibility Analysis Required: No	Government Levels Affected: Federal, Local, State, Tribal
Small Entities Affected: No	Federalism: No
Included in the Regulatory Plan: Yes
RIN Information URL: www.regulations.gov	Public Comment URL: www.regulations.gov
RIN Data Printed in the FR: No
Agency Contact: James A. Walke Mitigation Directorate Department of Homeland Security Federal Emergency Management Agency 1800 South Bell Street, Arlington, VA 20598-3030 Phone:202 646-2751 Fax:202 646-3074 Email: james.walke@fema.dhs.gov