FEMA Loan Interest Payment Relief Act

Bill Number: H.R. 2836
Origin Chamber: House
Congress: 119th Congress, Session 1
Policy Area: Emergency Management
Status: Introduced
Latest Action: 2025-04-10: Referred to the Subcommittee on Economic Development, Public Buildings, and Emergency Management.
Last Updated: 2026-05-20T14:21:02Z

AI-Generated Summary

Purpose

The FEMA Loan Interest Payment Relief Act (H.R. 2836) aims to ease financial burdens on local governments and electric cooperatives by authorizing federal reimbursement of interest payments on certain loans used for disaster recovery activities. It amends the Robert T. Stafford Disaster Relief and Emergency Assistance Act (commonly called the Stafford Act), which provides federal aid for disaster response and recovery.

Key Provisions

New Reimbursement Authority: Adds Section 431 to Title IV of the Stafford Act, allowing the President, through the Federal Emergency Management Agency (FEMA), to provide financial assistance to local governments (including the District of Columbia) or electric cooperatives for "qualifying interest" on loans.
Qualifying Interest: Defined as the lesser of (1) the actual interest paid to a lender or (2) the interest that would have been paid if the loan had an interest rate equal to the prime rate (a benchmark rate published by the Federal Reserve).
Qualifying Loan: A loan obtained by a local government or electric cooperative where at least 90% of the proceeds fund activities eligible for Stafford Act assistance after the loan is disbursed.
Retroactive Eligibility: Qualifying interest incurred in the 9 years before the bill's enactment is eligible for reimbursement.
Funding Restrictions: Only funds appropriated on or after the enactment date can be used for these reimbursements.
Alternative Procedures for Pending Projects:
Within 30 days of enactment, FEMA must establish and publish procedures in the Federal Register for states to seek reimbursement for qualifying interest on projects awaiting federal funding obligation as of enactment.
States must apply within 60 days of the procedures' publication.
FEMA must process and reimburse these requests within 1 year of enactment.

Significant Changes to Existing Law

The Stafford Act previously provided public assistance for disaster recovery costs but did not explicitly authorize reimbursement of interest on loans taken by local entities to cover those costs.
This bill introduces a new, targeted reimbursement mechanism for interest expenses, expanding federal support beyond direct project funding to include financing costs, with a cap tied to the prime rate to prevent excessive claims.
It also creates expedited processes for handling outstanding claims, which were not previously outlined in the law.

Potential Impacts

On Government Agencies: FEMA will face additional administrative responsibilities, including developing procedures, reviewing applications, and disbursing funds, potentially increasing workload and requiring new appropriations. States will act as intermediaries for some reimbursements, streamlining local access but adding state-level oversight.
On Citizens: Indirect benefits for residents in disaster-affected areas, as reimbursements could free up local budgets for essential services like infrastructure repair, reducing the need for tax increases or service cuts to cover loan interest.
On International Relations: No direct impacts, as the bill focuses on domestic disaster relief.

Main Stakeholders Affected

Local Governments and Electric Cooperatives: Primary beneficiaries, gaining relief from interest costs on recovery loans, which could improve their financial stability post-disaster.
States: Responsible for applying on behalf of locals for certain reimbursements, potentially enhancing coordination in disaster response.
FEMA and Federal Government: Tasked with implementation, funding, and oversight, which may strain resources without dedicated appropriations.
Lenders: Indirectly affected, as reimbursements could make it easier for locals to repay loans, but the prime rate cap limits federal exposure.

Notable Legal, Constitutional, or Political Implications

Legal: Establishes clear definitions and caps (e.g., prime rate limit) to ensure reimbursements are targeted and fiscally responsible, reducing potential for disputes over eligibility. The retroactive 9-year window could lead to a surge of claims, necessitating robust rulemaking to avoid legal challenges on fairness or delays.
Constitutional: Aligns with Congress's spending power under Article I, Section 8, by authorizing federal funds for disaster aid without infringing on state sovereignty (states opt into the process). No apparent free speech, due process, or equal protection issues.
Political: Sponsored by bipartisan members from disaster-prone states (e.g., Florida, Louisiana, Alabama), it may garner support for addressing recovery funding gaps highlighted in recent events like hurricanes. However, reliance on future appropriations could spark debates over federal spending priorities.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Dunn, Neal P. [R-FL-2]

Cosponsors (18)

Rep. Soto, Darren [D-FL-9], Rep. Lee, Laurel M. [R-FL-15], Rep. Carter, Troy A. [D-LA-2], Rep. Higgins, Clay [R-LA-3], Rep. Moore, Barry [R-AL-1], Rep. Webster, Daniel [R-FL-11], Rep. Gimenez, Carlos A. [R-FL-28], Rep. Bilirakis, Gus M. [R-FL-12], Rep. Moskowitz, Jared [D-FL-23], Rep. Donalds, Byron [R-FL-19], Rep. Mills, Cory [R-FL-7], Rep. Franklin, Scott [R-FL-18], Rep. Bean, Aaron [R-FL-4], Rep. Steube, W. Gregory [R-FL-17], Rep. Cammack, Kat [R-FL-3], Rep. Rutherford, John H. [R-FL-5], Rep. Scholten, Hillary J. [D-MI-3], Rep. Haridopolos, Mike [R-FL-8]

Recent Actions

2025-04-10: Referred to the Subcommittee on Economic Development, Public Buildings, and Emergency Management.
2025-04-10: Referred to the House Committee on Transportation and Infrastructure.
2025-04-10: Introduced in House
2025-04-10: Introduced in House

Bill Versions

FEMA Loan Interest Payment Relief Act — issued 2025-04-10 — PDF (5 pages)