[Congressional Record Volume 153, Number 5 (Wednesday, January 10, 2007)]
[Senate]
[Page S393]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. LANDRIEU:
  S. 253. A bill to permit the cancellation of certain loans under the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act, and 
for other purposes; to the Committee on Homeland Security and 
Governmental Affairs.
  Ms. LANDRIEU. Mr. President, it gives me great pleasure to introduce 
the Disaster Loan Fairness Act of 2007. This legislation strikes 
provisions contained in the Community Disaster Loan Act of 2005 and the 
Emergency Supplemental spending bill for hurricane relief, which 
prohibited forgiveness of Special Community Disaster Loans authorized 
in those measures.
  Section 417 of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act requires forgiveness of a loan if an independent audit 
determines that its recipient cannot sustain its repayment obligations 
after a 3-year grace period. The statute recognizes the very real 
possibility that hard-hit communities may need to be excused from 
repayment. For the first time in the history of the program though, 
forgiveness was specifically prohibited by the Community Disaster Loan 
Act of 2005. These were the strictest terms ever required. Clamping 
down in the wake of the worst disaster in history did not make sense at 
the time, and it does not make sense now.
  In the last Congress, I introduced S. 1872, which eliminated this 
provision governing the first round of loans authorized in October of 
2005. Louisiana applicants received about $739 million in this first 
round. This bill accomplishes that same objective, and also strikes 
forgiveness restrictions attached to a second round of loans authorized 
in June of 2006, through which Louisianans received about $261 million 
in Orleans, St. Bernard, and St. Tammany Parishes. These recipients in 
the second round included sheriffs, fire districts, levee districts, 
school boards, sewage and water boards, port harbor and terminal 
authorities, regional transit authorities and parish governments.

  Essential operational expenditures must be made to facilitate 
recovery in the wake of a disaster, including services like police, 
fire protection, transit and sanitation. One of the great ironies of 
the Community Disaster Loan Program is the fact that it exists largely 
to supplement shortcomings in the Stafford Act. Between 1970 and 1974, 
the program was administered as a grant program before the Stafford Act 
converted it to a loan program. FEMA will not reimburse emergency 
responders for their straight-time salaries, and a large portion of 
these loans were needed for payroll expenses to essential employees.
  This bill does not necessarily forgive all loans made to hurricane-
affected communities. Communities must apply for cancellation, and 
forgiveness is only permitted when an independent review of a city's 
fiscal health finds justification to cancel the debt. Even then, 
communities must still repay loan funds used for capital improvements, 
debt servicing, assessments, intragovernmental services, cost-sharing 
and otherwise reimbursable activities. It is also important to remember 
that the size of the loans has been limited to a proportion of the 
community's operating budget since these programs were first 
authorized.
  The majority of disaster loans have been repaid, and the program is 
used only by areas that have suffered a major disaster. In 29 years, 
the program has only received 64 applications associated with 21 
disasters. Compared to 1,104 disasters declared in total, that is a 
very small proportion. There were no loans issued under this authority 
for 6 years prior to FY 2005. These figures indicate that this program 
has not been abused by jurisdictions that could do without the funds. 
Program administrators and independent auditors have found cause to 
cancel 93 percent of loan funding distributed to hard-hit areas over 
the years, but this represents the inevitable fact that disasters can 
be catastrophic, and areas requiring significant help are less likely 
to be whole again after only 3 years.
  The City of New Orleans was forced to lay off 3,000 people--over 80 
percent of its workforce. Let us act now to ensure that other cities 
are not forced to follow, by giving a break to disaster loan recipients 
who prove unable to repay their debt. They will still have 3 years to 
try, and some may succeed, but we must adjust to the reality of the 
situation. It is time we relieve Gulf Coast communities of the burdens 
they were forced to shoulder in order to keep police cars, fire trucks 
and sanitation trucks rolling, reopen schools and bring cities back to 
life by getting things working.
  I ask unanimous consent the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 253

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Disaster Loan Fairness Act 
     of 2007''.

     SEC. 2. CANCELLATION OF LOANS.

       (a) In General.--Section 2(a) of the Community Disaster 
     Loan Act of 2005 (Public Law 109-88; 119 Stat. 2061) is 
     amended by striking ``Provided further, That notwithstanding 
     section 417(c)(1) of the Stafford Act, such loans may not be 
     canceled:''.
       (b) Disaster Assistance Direct Loan Program Account.--
     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; 120 Stat. 471) 
     is amended under the heading ``disaster assistance direct 
     loan program account'' under the heading ``Federal Emergency 
     Management Agency'' under the heading ``DEPARTMENT OF 
     HOMELAND SECURITY'', by striking ``Provided further, That 
     notwithstanding section 417(c)(1) of such Act, such loans may 
     not be canceled:''.

     SEC. 3. EFFECTIVE DATE.

       The amendments made by this Act shall be effective on the 
     date of enactment of the Community Disaster Loan Act of 2005 
     (Public Law 109-88; 119 Stat. 2061).
                                 ______