Bill would forgive debt for some disaster assistance recipients

A Senate lawmaker has introduced a bill that would waive certain debts for those who received disaster assistance erroneously from the government since 2005.

The legislation, introduced by Sen. Mark Pryor, D-Ark., would allow the head of the Federal Emergency Management Agency to forgive debts resulting from FEMA's errors, though not those resulting from fraud.

"I plan to work with the agency to prevent future errors," Pryor said in a statement. "In the meantime, we came up with a viable solution that ensures innocent people are not held hostage for the agency's blunders." Pryor, who chairs the Senate Homeland Security and Governmental Affairs Ad Hoc Subcommittee on Disaster Relief and Intergovernmental Affairs, said he's hopeful the bill will pass quickly.

An example of the problem occurred in 2008, when FEMA approved $27,000 in disaster assistance for a woman in Arkansas after she submitted an application and the agency conducted a home inspection. This year the agency told her that she was never eligible for the assistance and therefore must pay back the total amount within 30 days.

The legislation (S. 792) also would waive debt for all cases in which an applicant for disaster relief assistance was declared ineligible as a result of FEMA's determination that the applicant's home is in a community not participating in the National Flood Insurance Program.

FEMA provides disaster assistance to individuals and families through its Individuals and Households Program. IHP grants cannot exceed $29,900 per individual or household and are usually limited to 18 months. Since hurricanes Katrina and Rita, FEMA has disbursed more than $7 billion in IHP funds; a report from the Homeland Security Department's inspector general found FEMA had distributed $643 million in improper payments among 160,000 applicants after those two disasters because of human error or fraud.

But the agency has improved its process for recovering such improper payments, recouping more than $47 million in 2010 from those affected by hurricanes Katrina and Rita.