```

[House Report 110-228]
[From the U.S. Government Publishing Office]

110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    110-228

======================================================================

 
  HURRICANES KATRINA, RITA, AND WILMA FEDERAL MATCH RELIEF ACT OF 2007

                                _______
                                

 July 11, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Oberstar, from the Committee on Transportation and Infrastructure, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 1144]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Transportation and Infrastructure, to whom 
was referred the bill (H.R. 1144) to waive the non-Federal 
share of the cost of certain disaster assistance provided in 
connection with Hurricanes Katrina and Rita, and for other 
purposes, having considered the same, report favorably thereon 
with amendments and recommend that the bill as amended do pass.

  The amendments are as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Hurricanes Katrina, Rita, and Wilma 
Federal Match Relief Act of 2007''.

SEC. 2. FEDERAL SHARE OF DISASTER ASSISTANCE.

  (a) In General.--Notwithstanding any other provision of law, 
including any agreement, the Federal share of assistance, including 
direct Federal assistance, provided for the States of Louisiana, 
Mississippi, Texas, and Florida in connection with Hurricanes Katrina, 
Rita, and Wilma under sections 403, 406, 407, and 408 of the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170b, 
5172, 5173, and 5174) shall be 100 percent of the eligible costs under 
such sections.
  (b) Applicability.--
          (1) In general.--Subject to paragraph (2), the Federal share 
        provided by subsection (a) shall apply to disaster assistance 
        provided before, on, or after the date of enactment of this 
        Act.
          (2) Limitation.--In the case of disaster assistance provided 
        under sections 403, 406, and 407 of the Robert T. Stafford 
        Disaster Relief and Emergency Assistance Act, the Federal share 
        provided by subsection (a) shall be limited to assistance 
        provided for projects for which project worksheets have been 
        approved by the Federal Emergency Management Agency before the 
        date of enactment of this Act.

SEC. 3. CANCELLATION OF LOANS.

  (a) Community Disaster Loan Act.--
          (1) In general.--Section 2(a) of the Community Disaster Loan 
        Act of 2005 (Public Law 109-88) is amended by striking 
        ``Provided further, That notwithstanding section 417(c)(1) of 
        the Stafford Act, such loans may not be canceled:''.
          (2) Effective date.--The amendment made by paragraph (1) 
        shall be effective on the date of enactment of the Community 
        Disaster Loan Act of 2005 (Public Law 109-88).
  (b)  Emergency Supplemental Appropriations Act.--
          (1) In general.--Chapter 4 of title II of the Emergency 
        Supplemental Appropriations Act for Defense, the Global War on 
        Terror, and Hurricane Recovery, 2006 (Public Law 109-234) is 
        amended under the heading ``FEDERAL EMERGENCY MANAGEMENT 
        AGENCY-disaster assistance direct loan program account'' by 
        striking ``Provided further, That notwithstanding section 
        417(c)(1) of such Act, such loans may not be canceled:''.
          (2) Effective date.--The amendment made by paragraph (1) 
        shall be effective on the date of enactment of the Emergency 
        Supplemental Appropriations Act for Defense, the Global War on 
        Terror, and Hurricane Recovery, 2006 (Public Law 109-234).

  Amend the title so as to read:

    A bill to waive the non-Federal share of the cost of 
certain disaster assistance provided in connection with 
Hurricanes Katrina, Rita, and Wilma.

                       Purpose of the Legislation

    H.R. 1144, as amended, waives the non-Federal share of the 
cost of certain disaster assistance related to Hurricanes 
Katrina, Rita, and Wilma and restores the authority of the 
Federal Emergency Management Agency (``FEMA'') to cancel loans 
to local governments for recovery from Hurricanes Katrina, 
Rita, and Wilma under the Community Disaster Loan (``CDL'') 
program.

                  Background and Need for Legislation

    The inability of the States of Louisiana, Mississippi, 
Texas, and Florida, as well as local governments in these 
States, to meet the non-Federal share of assistance under title 
IV of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (``Stafford Act'') has been raised as one of the 
causes of the delays in the reconstruction in the aftermath of 
Hurricanes Katrina, Rita, and Wilma. The Public Assistance 
program is the main vehicle that FEMA uses to provide post-
disaster support to State and local governments and to certain 
private non-profit organizations that perform government 
functions. The main provisions of the Public Assistance program 
are authorized by Sections 403, 406, and 407 of the Stafford 
Act which address essential assistance, reconstruction of 
facilities, and debris removal, respectively. Under current 
law, the Federal share for the Public Assistance program is set 
at not less than 75 percent. FEMA has the discretion to raise 
the Federal share to 100 percent administratively, and did so 
for an initial period for Direct Federal Assistance, debris 
removal, and certain emergency response costs. FEMA has 
generally adjusted the Federal share for Public Assistance to 
90 percent for Hurricanes Katrina, Rita, and Wilma. However, 
the Administration has not chosen to fully exercise its 
authority and raise the Federal share to 100 percent for these 
storms, which included the largest natural disaster in American 
history, despite having done so after other disasters such as 
Hurricane Andrew.
    The Other Needs Assistance program under Section 408 of the 
Stafford Act provides replacement of personal property, 
including automobiles. The program also provides for 
reimbursement of disaster-related medical, dental, and funeral 
expenses. The Other Needs Assistance program can be 
administered by either the state or FEMA. The Stafford Act 
provides that the Federal share is 75 percent (with no 
possibility for an administrative cost share adjustment), and 
unlike other Stafford Act disaster programs that are cost 
shared, the Stafford Act specifies that the non-Federal share 
must come from the state.
    The Community Disaster Loan program is a Stafford Act 
program that pre-dated Hurricane Katrina and is authorized 
under Section 417 of the Stafford Act. Under this program, 
local communities can receive loans for up to 25 percent of 
their annual operating budget (subject to a $5-million limit) 
to cover disaster-related losses in tax and other revenues. 
Under this program, loans ``shall be cancelled'' to the extent 
that the local government has disaster-related revenue losses 
or unreimbursed disaster expenses in the three fiscal years 
after the disaster. Historically, the vast majority of the 
loans (more than 90 percent) under this program have been 
cancelled.
    In the 109th Congress, Congress enacted the Community 
Disaster Loan Act of 2005 (P.L. 109-88). The Act authorized up 
to $1 billion of loans under the CDL program and allowed loans 
to exceed the $5 million limit. However, the Act specifically 
prohibited the cancellation of these loans pursuant to Section 
417 of the Stafford Act. Pursuant to the Emergency Supplemental 
Appropriations Act for Defense, the Global War on Terror, and 
Hurricane Recovery 2006 (P.L. 109-234), Congress appropriated 
an additional $371 million for the CDL program for Hurricane 
Katrina and other Hurricanes of the 2005 season. The Emergency 
Supplemental Appropriations Act also specifically prohibited 
the cancellation of these loans pursuant to Section 417 of the 
Stafford Act. The communities devastated by the greatest 
natural disaster in our Nation's history continue to face a 
difficult recovery.

                       Summary of the Legislation

Section 1. Short title

    Section 1 states the title of the bill as the ``Hurricanes 
Katrina, Rita, and Wilma Federal Match Relief Act of 2007''.

Section 2. Federal share of disaster assistance

    Section 2 of the bill waives the non-Federal share of 
certain Federal Emergency Management Agency (FEMA) disaster 
assistance provided to Louisiana, Mississippi, Texas, and 
Florida under title IV of the Stafford Act. Section 2 increases 
the Federal share for the Public Assistance and Other Needs 
Assistance programs to 100 percent. The increase in the Federal 
share for Public Assistance only applies to projects approved 
by FEMA prior to the date of 
enactment.

Section 3. Cancellation of loans

    Section 3 of the bill strikes provisions of P.L. 109-88 and 
P.L. 109-234, which eliminated FEMA's authority to cancel loans 
under the CDL program (Section 417 of the Stafford Act) for 
loans to local governments for recovery from Hurricanes 
Katrina, Rita, and Wilma. Loans to local governments for 
recovery from Hurricanes Katrina, Rita, and Wilma would be 
authorized to be cancelled if the local governments meet the 
statutory test outlined in Section 417 of the Stafford Act.

            Legislative History and Committee Consideration

    On March 1, 2007, the Committee on Transportation and 
Infrastructure met in open session and adopted an amendment in 
the nature of a substitute by voice vote. The amendment 
specified the cost share adjustment applied to Sections 403, 
406, 407, and 408 of the Stafford Act, and applied the 
Community Disaster Loan Program provisions to P.L. 109-243. An 
amendment to the amendment in the nature of a substitute was 
adopted by voice vote to include Texas among the States granted 
a waiver from the non-Federal share of FEMA disaster 
assistance. An additional amendment to the amendment in the 
nature of a substitute was adopted by voice vote to add the 
State of Florida and Hurricane Wilma to the bill. The Committee 
on Transportation and Infrastructure ordered the bill, as 
amended, reported favorably to the House by voice vote.

                              Record Votes

    Clause 3(b) of rule XIII of the House of Representatives 
requires each committee report to include the total number of 
votes cast for and against on each record vote on a motion to 
report and on any amendment offered to the measure or matter, 
and the names of those members voting for and against. There 
were no recorded votes taken in connection with ordering H.R. 
1144, as amended, reported. A motion to order H.R. 1114, as 
amended, reported favorably to the House was agreed to by voice 
vote with a quorum present.

                      Committee Oversight Findings

    With respect to the requirements of clause 3(c)(I) of rule 
XIII of the Rules of the House of Representatives, the 
Committee's oversight findings and recommendations are 
reflected in this report.

                          Cost of Legislation

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives does not apply where a cost estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974 has been timely submitted prior to the filing of the 
report and is included in the report. Such a cost estimate is 
included in this report.

                    Compliance With House Rule XIII

    1. With respect to the requirement of clause 3(c)(2) of 
rule XIII of the Rules of the House of Representatives, and 
308(a) of the Congressional Budget Act of 1974, the Committee 
references the report of the Congressional Budget Office 
included in the report.
    2. With respect to the requirement of clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, the 
performance goals and objectives of this legislation are to 
waive the non-Federal share of the cost of certain disaster 
assistance provided in connection with Hurricanes Katrina, 
Rita, and Wilma, and for other purposes.
    3. With respect to the requirement of clause 3(c)(3) of 
rule XIII of the Rules of the House of Representatives and 
section 402 of the Congressional Budget Act of 1974, the 
Committee has received the enclosed cost estimate for H.R. 1144 
from the Director of the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 13, 2007.
Hon. James L. Oberstar,
Chairman, Committee on Transportation and Infrastructure, U.S. House of 
        Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1144, the 
Hurricanes Katrina, Rita, and Wilma Federal Match Relief Act of 
2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Daniel 
Hoople (for federal costs) and Melissa Merrell (for the state 
and local impact).
            Sincerely,
                                           Peter R. Orszag,
                                                          Director.
    Enclosure.

H.R. 1144--Hurricanes Katrina, Rita, and Wilma Federal Match Relief Act 
        of 2007

    Summary: H.R. 1144 would remove provisions in current law 
that prohibit the Federal Emergency Management Agency (FEMA) 
from forgiving about $1.3 billion in loans made to certain 
local governments following the 2005 Gulf Coast hurricanes. 
Under procedures specified in the Federal Credit Reform Act for 
recording the cost of direct federal loans, the Administration 
estimated that those FEMA loans would cost about $1 billion, 
reflecting a subsidized interest rate and the considerable 
likelihood that some of the loans would not be repaid. H.R. 
1144 would modify the terms of those loans, effectively 
converting them to grants at an estimated cost of $321 million. 
Enacting H.R. 1144 would affect direct spending because that 
cost would be incurred without any subsequent legislation. The 
legislation would not affect revenues.
    Under current law, funds appropriated to the FEMA Disaster 
Relief Fund are available for certain public assistance and 
infrastructure repair projects; however, state and local 
governments must provide a portion of the project's costs to 
match the FEMA funds. In some cases, states are able to use 
funds from other federal programs to provide matching funds. In 
other instances, state and local sources are used to provide 
the matching funds. H.R. 1144 would direct FEMA to provide 100 
percent of the funds for projects related to the 2005 Gulf 
Coast hurricanes; thus, no local matching funds would be 
required for such FEMA recovery projects. CBO does not expect 
that this proposed change in the match requirement would have a 
significant effect on the pace of federal expenditures for 
hurricane relief efforts. It is possible that implementing H.R. 
1144 could lead to an increase in the need for additional 
appropriations to FEMA to provide disaster relief. CBO has no 
basis for assessing the total needs for such funds in the Gulf 
states relative to the amounts the Congress has already 
provided. Furthermore, H.R. 1144 does not authorize the 
appropriation of additional funds for disaster relief.
    H.R. 1144 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would benefit some local governments in Louisiana and 
Mississippi.
    Estimated Cost to the Federal Government: The estimated 
budgetary impact of H.R. 1144 is shown in the following table. 
The costs of this legislation fall within budget function 450 
(community and regional development).

----------------------------------------------------------------------------------------------------------------
                                                                     By fiscal year, in millions of dollars--
                                                                 -----------------------------------------------
                                                                   2007    2008    2009    2010    2011    2012
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

Community Disaster Loan Forgiveness:
    Estimated Budget Authority..................................     321       0       0       0       0       0
    Estimated Outlays...........................................     321       0       0       0       0       0
----------------------------------------------------------------------------------------------------------------

    Basis of Estimate: For this estimate, CBO assumes that the 
bill will be enacted in fiscal year 2007. The cost of a 
legislated change in the terms of existing loans is recorded in 
the year that such legislation is enacted.

Community disaster loan forgiveness

    In 2005 and 2006, the Congress authorized FEMA to make 
about $1.3 billion in loans to local governments in Louisiana 
and Mississippi suffering substantial revenue loss as a result 
of the 2005 Gulf Coast hurricanes (see Public Laws 109-88 and 
109-234). Under procedures specified in the Federal Credit 
Reform Act for recording the cost of direct federal loans, the 
Congress provided about $1 billion in budget authority for such 
loans, reflecting the estimated cost to the federal government 
of subsidized interest rate of those loans and the considerable 
likelihood that some of the loans would not be repaid.
    The Stafford Act requires partial or full forgiveness of 
community disaster loan repayments if, after three years, local 
revenue remains insufficient to meet operating expenses. 
Separate provisions within Public Laws 109-88 and 109-234, 
however, prohibit FEMA from forgiving this cohort of community 
disaster assistance loans. As such, CBO assumes that local 
communities will make loan repayments over the next several 
years with an estimated net present value of $321 million.
    H.R. 1144 would strike the provisions of current law that 
prohibit loan forgiveness for this FEMA loan cohort. Based on 
information from the Administration, CBO expects that this 
legislative modification to the terms of those loans would lead 
to forgiveness of the loans. Under the Federal Credit Reform 
Act, the budgetary cost of legislative modifications to the 
terms of existing loans--the net present value of the cost of 
the modification--is recorded on the budget in the same year 
that the legislation making the modification is enacted. Thus, 
CBO estimates that this provision would cost $321 million in 
2007.

Increase in federal share of disaster assistance

    FEMA is authorized under the Stafford Act to provide 
assistance, using funds appropriated to its Disaster Relief 
Fund, to areas affected by a major disaster. For certain types 
of assistance, state and local governments must match federal 
dollars with funding from other sources. This matching 
requirement varies from nothing to 25 percent, depending on the 
type of assistance and the magnitude of the disaster.
    H.R. 1144 would require the federal share for disaster 
assistance to be 100 percent for FEMA's essential assistance, 
public infrastructure, debris removal, and individual and 
housing programs. This requirement would apply to FEMA projects 
in the states of Louisiana, Mississippi, Texas, and Florida 
related to recovery from Hurricanes Katrina, Rita, and Wilma.
    As a result, CBO expects that the pace of FEMA' s contract 
obligations could accelerate over the next few years for 
projects already approved by the agency. However, CBO does not 
expect that there would be a significant acceleration of 
program expenditures as a result of this provision because FEMA 
and the Gulf states indicate that other factors, such as local 
rules and planning requirements governing infrastructure 
projects and the availability of contractors strongly influence 
the pace of project expenditures. Therefore, CBO estimates that 
enacting this provision would have no significant effect on 
direct spending.
    Implementing this provision of H.R. 1144 could lead to a 
need for additional appropriations to FEMA to fund projects 
currently scheduled (to receive only partial assistance from 
federal funds. This cost estimate does not include an estimate 
of any such additional costs, however, because CBO has no basis 
to assess the total needs for such funds in the Gulf states 
relative to the amounts the Congress has already provided. 
Furthermore, H.R. 1144 does not authorize the appropriation of 
additional funds to FEMA for disaster relief.
    Intergovernmental and Private-sector Impact: H.R. 1144 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The bill would authorize FEMA to convert to 
grants certain disaster loans awarded after the 2005 hurricane 
season. Local governments in Louisiana and Mississippi would 
benefit from the cancellation of repayment requirements for 
about $1.3 billion in loans.
    Estimate prepared by: Federal Costs: Daniel Hoople; Impact 
on State, Local, and Tribal Governments: Melissa Merrell; 
Impact on the Private Sector: Fatimot Ladipo.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                     Compliance With House Rule XXI

    Pursuant to clause 9 of rule XXI of the Rules of the House 
of Representatives, H.R. 1144 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(d), 9(e), or 9(f) of rule XXI 
of the Rules of the House of Representatives.

                   Constitutional Authority Statement

    Pursuant to clause (3)(d)(1) of rule XIII of the Rules of 
the House of Representatives, committee reports on a bill or 
joint resolution of a public character shall include a 
statement citing the specific powers granted to the Congress in 
the Constitution to enact the measure. The Committee on 
Transportation and Infrastructure finds that Congress has the 
authority to enact this measure pursuant to its powers granted 
under article I, section 8 of the Constitution.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act (Public Law 104-4).

                        Preemption Clarification

    Section 423 of the Congressional Budget Act of 1974 
requires the report of any Committee on a bill or joint 
resolution to include a statement on the extent to which the 
bill or joint resolution is intended to preempt state, local, 
or tribal law. The Committee states that H.R. 1144, as amended, 
does not preempt any state, local, or tribal law.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act are created by this 
legislation.

                Applicability to the Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act (Public Law 
104-1).

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

COMMUNITY DISASTER LOAN ACT OF 2005

           *       *       *       *       *       *       *

SEC. 2. DISASTER LOANS.

  (a) Essential Services.--Of the amounts provided in Public 
Law 109-62 for ``Disaster Relief'', up to $750,000,000 may be 
transferred to the Disaster Assistance Direct Loan Program for 
the cost of direct loans as authorized under section 417 of the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act 
(42 U.S.C. 5184) to be used to assist local governments in 
providing essential services: Provided, That such transfer may 
be made to subsidize gross obligations for the principal amount 
of direct loans not to exceed $1,000,000,000 under section 417 
of the Stafford Act: Provided further, That notwithstanding 
section 417(b) of the Stafford Act, the amount of any such loan 
issued pursuant to this section may exceed $5,000,000: 
[Provided further, That notwithstanding section 417(c)(1) of 
the Stafford Act, such loans may not be canceled:] Provided 
further, That the cost of modifying such loans shall be as 
defined in section 502 of the Congressional Budget Act of 1974 
(2 U.S.C. 661a).

           *       *       *       *       *       *       *

                              ----------                              

 EMERGENCY SUPPLEMENTAL APPROPRIATIONS ACT FOR DEFENSE, THE GLOBAL WAR 
ON TERROR, AND HURRICANE RECOVERY, 2006

           *       *       *       *       *       *       *

                                TITLE II

FURTHER HURRICANE DISASTER RELIEF AND RECOVERY

           *       *       *       *       *       *       *

                               CHAPTER 4

DEPARTMENT OF HOMELAND SECURITY

           *       *       *       *       *       *       *

Federal Emergency Management Agency

           *       *       *       *       *       *       *

            DISASTER ASSISTANCE DIRECT LOAN PROGRAM ACCOUNT

  For an additional amount for ``Disaster Assistance Direct 
Loan Program Account'' for the cost of direct loans as 
authorized under section 417 of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (42 U.S.C. 5184), 
$279,800,000, to be used to assist local governments affected 
by Hurricane Katrina and other hurricanes of the 2005 season in 
providing essential services, of which $1,000,000 is for 
administrative expenses to carry out the direct loan program: 
Provided, That such funds may be made to subsidize gross 
obligations for the principal amount of direct loans not to 
exceed $371,733,000: Provided further, That notwithstanding 
section 417(b) of such Act, the amount of any such loan issued 
pursuant to this section may exceed $5,000,000, and may be 
equal to not more than 50 percent of the annual operating 
budget of the local government in any case in which that local 
government has suffered a loss of 25 percent or more in tax 
revenues due to Hurricane Katrina or Hurricane Rita: [Provided 
further, That notwithstanding section 417(c)(1) of such Act, 
such loans may not be canceled:] Provided further, That the 
cost of modifying such loans shall be as defined in section 502 
of the Congressional Budget Act of 1974 (2 U.S.C. 661a): 
Provided further, That the amounts provided under this heading 
are designated as an emergency requirement pursuant to section 
402 of H. Con. Res. 95 (109th Congress), the concurrent 
resolution on the budget for fiscal year 2006.

           *       *       *       *       *       *       *

                                  

```