Groups Urge Congress to Pass FEMA Reimbursement Legislation

by Paul Ciampoli
APPA News Director
August 28, 2023

The American Public Power Association and other trade groups on Aug. 28 sent a letter to key lawmakers urging swift passage of legislation that calls for the Federal Emergency Management Agency to reimburse local governments and cooperative electric utilities for interest expenses of loans used to fund activities for which they receive assistance under FEMA’s public assistance program.

The groups wrote in support of the FEMA Loan Interest Payment Relief Act (H.R. 2672, S. 1180), sponsored by Representatives Neal Dunn (R-Fla.), Darren Soto (D-Fla.), and Garret Graves (R-La.) and by Senators Marco Rubio (R-Fla.) and Rick Scott (R-Fla.)

“Collectively, we represent the counties, cities, and non-profit electric utilities that are on the front lines responding to natural disasters throughout the country. We urge the committees to consider and pass this bipartisan legislation without delay,” the letter said.

The letter was sent to Sen. Gary Peters (D-Mich.), and Chairman of the Senate Committee on Homeland Security and Governmental Affairs, Sen. Rand Paul (R-Ky.), Ranking Member for the Committee on Homeland Security and Governmental Affairs, Rep. Sam Graves (R-Mo.), Chairman of the House Committee on Transportation and Infrastructure, and Rep. Rick Larsen (D-Wash.), Ranking Member on the Committee on Transportation and Infrastructure.

The groups noted that following a disaster, line workers, locally-elected officials, public works employees, and emergency managers are first on the scene and play a key role in coordinating recovery and rebuilding efforts.

“As the frequency, severity, and cost of disasters continues to increase, we have learned that even the most well-resourced communities may not have the funds needed to adequately respond to a disaster. Therefore, our members are often forced to take out large loans or lines of credit to cover the immediate costs of recovery to return their communities and residents’ lives back to normal as quickly as possible,” the letter said.

The groups said that they appreciate the eventual reimbursement offered through FEMA’s Public Assistance program. However, this process “can often be arduous and time consuming, with final payments sometimes not made until years after the fact. And when communities must borrow to cover these recovery costs until reimbursement is made, that means years of accumulating interest, all of which must be paid by local residents.”

They noted that on October 10, 2018, Hurricane Michael made landfall at Mexico Beach in Bay County Florida as a devastating Category Five storm with sustained winds of 160 miles per hour. “Fifty-six months later, local communities and utilities that took out hundreds of millions of dollars’ worth of loans to cover the costs of recovery are still paying interest while they await FEMA reimbursement.”

The FEMA Loan Interest Payment Relief Act would mitigate this additional burden by requiring FEMA to reduce the cost of loans taken out while the public assistance process is completed.

“Specifically, in an approach that enjoys broad bipartisan support, FEMA would reimburse local governments and cooperative electric utilities for interest expenses of loans used to fund activities for which they receive assistance” under the public assistance program, the groups said.

This reimbursement would be limited to the lesser of the actual interest paid or the interest that would be paid at the prime rate.