Committee approves bill that would forgive debt for some disaster assistance recipients

A Senate panel has approved legislation that would waive certain debts for those who received disaster assistance erroneously.

The Homeland Security and Governmental Affairs Committee passed the 2011 Disaster Assistance Recoupment Fairness Act on Thursday, after rejecting it last week. The bill's sponsor, Sen. Mark Pryor, D-Ark., tightened up some of the language making clear that the Federal Emergency Management Agency administrator cannot waive debt in cases involving fraud.

"We should absolutely pursue dollars that FEMA gave out when fraud was involved," Pryor said. "However, some individuals did everything right and the errors were solely on FEMA's part of the equation. Under these circumstances, my bill offers FEMA some flexibility to waive their debts." The full Senate will now consider the legislation, which forgives debts since 2005 resulting from FEMA's errors.

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 repay the entire amount within 30 days.

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 DHS' 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. The agency has improved its process for recovering such improper payments, recouping more than $47 million in 2010 from those affected by the two hurricanes.