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DEPARTMENT OF HOMELAND
SECURITY
Federal Emergency Management
Agency
[Docket ID FEMA–2005–0051]

44 CFR Part 206
RIN 1660–AA44

Special Community Disaster Loans
Program
AGENCY: Federal Emergency
Management Agency, DHS.
ACTION: Notice of proposed rulemaking.

The Federal Emergency
Management Agency (FEMA) proposes
to amend its regulations regarding the
Special Community Disaster Loans
Program to implement loan cancellation
provisions for Special Community
Disaster Loans provided by FEMA to
local governments in the Gulf region
following Hurricanes Katrina and Rita.
This rule does not propose the
automatic cancellation of all Special
Community Disaster Loans. This rule
proposes procedures and requirements
for governments who received Special
Community Disaster Loans to apply for
cancellation of loan obligations as
authorized by the U.S. Troop Readiness,
Veterans’ Care, Katrina Recovery, and
Iraq Accountability Appropriations Act,
2007. The proposed procedures are
intended to provide sufficient
information to FEMA to determine
when cancellation of a Special
Community Disaster Loan, in whole or
in part, is warranted. This proposed rule
would not apply to any loans made
under FEMA’s traditional Community
Disaster Loan program which is
governed under separate regulations.
DATES: Comments on the proposed rule,
including the Paperwork Reduction Act
information collection, are due on or
before June 2, 2009.
ADDRESSES: You may submit comments,
identified by Docket ID FEMA–2005–
0051, by one of the following methods:
Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
E-mail: [email protected].
Include Docket ID FEMA–2005–0051 in
the subject line of the message.
Fax: 703–483–2999.
Mail/Hand Delivery/Courier: Office of
Chief Counsel, Federal Emergency
Management Agency, Room 835, 500 C
Street, SW., Washington, DC 20472–
3100.
FOR FURTHER INFORMATION CONTACT:
James A. Walke, Disaster Assistance
Directorate, Federal Emergency

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SUMMARY:

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Management Agency, 500 C Street, SW.,
Washington, DC 20472–3300, or call
(202) 646–2751, or e-mail
[email protected].
Requests for additional information
regarding FEMA’s Paperwork Reduction
Act information collection requirements
or copies of the information collection
should be made to Director, Records
Management and Privacy, FEMA, 1800
Bell Street, Arlington, VA 20598–3005,
facsimile number (202) 646–3347, or email address [email protected].
SUPPLEMENTARY INFORMATION:

Request for Comments on the
Rulemaking
FEMA encourages public
participation in this rulemaking. All
submissions received must include the
agency name and docket ID (FEMA2005–0051). Regardless of the method
used for submitting comments or
material, all submissions will be posted,
without change, to the Federal
eRulemaking Portal at http://
www.regulations.gov, and will include
any personal information you provide.
Therefore, submitting this information
makes it public. You may wish to read
the Privacy Act notice that is available
on the Privacy and Use Notice link on
the Administration Navigation Bar of
http://www.regulations.gov.
All comments received, as well as this
document, are available on the public
docket for this rulemaking. For access to
the docket, go to the Federal
eRulemaking Portal at http://
www.regulations.gov. Submitted
comments may also be inspected at
FEMA, Office of Chief Counsel, Room
835, 500 C Street, SW., Washington, DC
20472–3100.
At this time, FEMA does not
anticipate it will hold a public meeting
for this rulemaking project.
I. Background and Purpose
The Federal Emergency Management
Agency’s (FEMA’s) Community Disaster
Loan (CDL) Program provides funding to
help local governments that have
incurred significant loss in revenue due
to a presidentially declared disaster,
revenue that is necessary for local
governments to provide essential
municipal services, such as public
schools, fire and police services, and
sanitation services. The CDL Program
for local governments began in 1970 as
a program of community disaster grants.
In 1974, Congress replaced the grant
program with a program of community
disaster loans. Since 1976, FEMA has
issued 55 Community Disaster Loans
under this program, totaling

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approximately $233.5 million. FEMA’s
traditional CDL Program is governed
under 44 CFR part 206 subpart K. See
44 CFR 206.360.
On August 29, 2005, Hurricane
Katrina hit Louisiana, Mississippi,
Florida, and Alabama and emergencies
were declared in each of the 4 States—
the most for any single disaster in
FEMA history. Hurricane Rita soon
followed on September 21, 2005, in an
area that had already been affected by
Hurricane Katrina. Federal disaster
declarations for the storms covered
90,000 square miles of the United
States, an area roughly the size of the
State of Oregon. The hurricanes directly
affected over 1.5 million people,
displaced approximately 771,000
people, and resulted in a peak shelter
population of over 267,000 people.
Hurricanes Katrina and Rita
devastated communities in Louisiana,
Texas, Mississippi, and Alabama. Tax
revenue was lost because people no
longer lived in the area. Residents who
remained were unable to pay taxes due
to unemployment. Mass evacuations
and limited sheltering options in the
region resulted in fewer households
purchasing goods and services and, in
turn, paying sales tax. Although the tax
base was severely depleted,
communities still had to provide
essential services such as police,
medical personnel, teachers, and
firefighters. Those costs are not eligible
for Stafford Act funding from FEMA
under the Public Assistance Program or
under any other FEMA grant program.
Further, the traditional CDL program
cap of $5 million per individual loan
was too small for the catastrophic and
long term nature of these disasters.
Realizing the catastrophic nature of
Hurricanes Katrina and Rita, the
unusual circumstances facing these
local communities, and the lack of preexisting sources of Federal funding,
Congress passed the Community
Disaster Loan Act of 2005, Public Law
109–88 (Oct. 7, 2005) (2005 Act). The
2005 Act authorized FEMA to transfer
funds appropriated in the Second
Emergency Supplemental
Appropriations Act To Meet Immediate
Needs Arising From The Consequences
Of Hurricane Katrina, 2005, Public Law
109–62 (Sept. 8, 2005), to support up to
$1 billion in loan authority to assist
communities impacted by Hurricanes
Katrina and Rita. Loans issued by FEMA
under the 2005 Act are referred to as
‘‘Special Community Disaster Loans.’’
For these Special Community Disaster
Loans (Special CDLs), the 2005 Act
added three elements to the traditional
CDL program under section 417 of the
Robert T. Stafford Disaster Relief and

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Emergency Assistance Act (Stafford
Act), 42 U.S.C. 5184: (1) It removed the
$5 million limit on individual loans; (2)
it restricted the loans ‘‘to assist local
governments in providing essential
service;’’ and (3) it made the loan
cancellation provision of section
417(c)(1) of the Stafford Act
inapplicable.
FEMA published an interim rule on
October 18, 2005, to implement the
provisions of the 2005 Act. See at 70 FR
60443; also 44 CFR 206.370–206.377.
The interim rule took effect immediately
to allow FEMA to provide these loans as
soon as possible to the local
governments already impacted by
Hurricanes Katrina and Rita. Special
CDLs, and their accompanying
regulations, only apply to communities
affected by Katrina and Rita. Further,
FEMA was only authorized to approve
loans in either the fiscal year in which
the disaster occurred (FY 2005) or the
fiscal year immediately following that
year (FY 2006). Although FEMA is no
longer authorized to grant new
applications for Special CDLs, FEMA
has chosen not to remove the Special
CDL regulations at this time, as the
conditions such as loan administration,
repayment, terms, and restrictions on
the use of loan funds may still be
applicable.
After FEMA published its interim
rule, Congress passed the Emergency
Supplemental Appropriations Act for
Defense, the Global War on Terror, and
Hurricane Recovery, 2006, Public Law
109–234 (June 15, 2006) (2006 Act),
which appropriated funds to support
$371,733,000 in loan authority in
addition to the loans authorized under
the 2005 Act. However, certain
eligibility criteria for the 2006 Act
program were different from those in the
2005 Act program. The 2006 Act
included three changes: (1) The
maximum loan amount was increased to
50 percent of the applicant’s operating
budget the fiscal year of the disaster; (2)
the loan analysis could only consider
‘‘tax revenue’’ loss and not ‘‘other
revenues’’ as allowed for in the 2005
Act; and (3) applicants were required to
demonstrate actual loss in tax revenues
of 25 percent or greater. The 2006 Act,
like the 2005 Act, made the loan
cancellation provision of section
417(c)(1) of the Stafford Act
inapplicable.
As a result of the 2005 and 2006 Acts,
FEMA made 152 loans totaling
$1,270,501,241 to 109 eligible
applicants in Mississippi and Louisiana.
Under the 2005 Act, FEMA made 52
loans totaling $261,135,806 in
Mississippi and 84 loans totaling
$738,864,194 in Louisiana. In total, $1

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billion of the $1 billion loan level
authorized in the 2005 Act was
provided to eligible applicants
devastated by Hurricanes Katrina and
Rita. Under the 2006 Act, FEMA made
four additional loans totaling $9,485,908
in Mississippi and twelve additional
loans totaling $261,015,333 in
Louisiana. In total, $270,501,241 of the
$371,733,000 loan level authorized in
the 2006 Act was provided to eligible
applicants devastated by Hurricanes
Katrina and Rita. No additional eligible
applicants were identified prior to the
September 30, 2006 deadline for the
remaining $101,231,759 of the loan
authority.
The U.S. Troop Readiness, Veterans’
Care, Katrina Recovery, and Iraq
Accountability Appropriations Act,
2007, Public Law 110–28, section
4502(a), 119 Stat. 2061 (May 25, 2007)
(2007 Act), removed the loan
cancellation prohibitions contained in
the 2005 and 2006 Acts. This
amendment retroactively applies to the
dates of enactment of both Acts. This
statutory change now gives FEMA
discretionary authority, limited by the
language in section 417(c)(1) of the
Stafford Act (42 U.S.C. 5184), to cancel
Special CDLs.
With this new authority, FEMA shall
cancel a loan if ‘‘the revenues of the
local government during the full three
fiscal year period following the disaster
are insufficient to meet the operating
budget for the local government,
including additional unreimbursed
disaster-related expenses for a
municipal operating character.’’ This
authority is the same as FEMA’s
authority to cancel loans issued under
its traditional CDL program, which have
implementing regulations at 44 CFR
206.366. This rulemaking proposes
procedures and requirements for local
governments to apply for cancellation of
Special CDLs, that are the same as those
established for the traditional CDL
program. FEMA expects to determine
whether a local government’s revenues
are insufficient using the same method
FEMA currently uses to determine loan
cancellations under the traditional CDL
program. Currently, if an applicant has
a three year cumulative operating
deficit, FEMA analyzes the applicant’s
revenue during that time to determine if
the deficit was caused by insufficient
revenues. FEMA determines this by
subtracting the applicant’s actual postdisaster revenues from the revenue the
applicant expected to obtain had the
disaster not occurred. This net
difference is the estimated revenue loss.
If revenue loss does not account for the
entire deficit, FEMA examines the
applicant’s disaster-related expenditures

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to determine if an increase in
expenditures contributed to the deficit.
Based on the results of this analysis,
FEMA may cancel all or a part of the
loan.
II. This Proposed Rule
With the passage of the 2007 Act,
FEMA has been given the discretionary
ability to cancel Special CDLs issued
under the 2005 and 2006 Acts subject to
the limitations of section 417(c) of the
Stafford Act. Accordingly, FEMA
proposes to amend its Special CDL
regulations to include loan cancellation
procedures and requirements.
Removing the prohibition against
cancellation is consistent with FEMA’s
handling of loans provided to
communities affected under all other
disasters. For example, communities
who receive traditional CDLs may be
eligible for loan cancellation. Other
communities who have met the
cancellation requirements of section
417(c)(1) of the Stafford Act also have
had loans cancelled.
Furthermore, FEMA believes the
sustained financial long-term recovery
of the communities affected by
Hurricanes Katrina and Rita may
continue to be at risk. For those
communities that have not exhibited
reasonable financial recovery after three
years, cancellation may be appropriate,
subject to the limitations of section
417(c) of the Stafford Act. A number of
the Gulf Coast communities that carry
Special Community Disaster Loans have
argued that if they do not have the
financial strength to repay these loans
on a timely basis, going into default may
further impede their ability to recover,
affecting among other things, a
municipality’s ability to issue bonds.
This rule does not propose the
automatic cancellation of all Special
Community Disaster Loans. FEMA’s
authority to provide cancellation is
limited to those communities whose
revenues during the three full fiscal year
period following the major disaster are
insufficient to meet its operating budget,
including additional disaster-related
expenses of a municipal operation
character. The proposed procedures are
intended to provide sufficient
information to FEMA to determine
when cancellation of a Special
Community Disaster Loan, in whole or
in part, is warranted.
FEMA proposes to treat those affected
by Hurricanes Katrina and Rita under
the same terms as traditional CDL
recipients. Section 417 of the Stafford
Act provides FEMA with the
cancellation authority for both the
Special CDL Program and the traditional
CDL Program. FEMA implemented

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cancellation provisions for the
traditional CDL Program regulations at
44 CFR 206.366. FEMA has been
applying these provisions to the
traditional CDL Program since 1990 and
has found them to be successful in
providing the information necessary to
determine whether cancellation is
appropriate. Since the statutory
authority to cancel the loans, as
provided for in section 417(c)(1) of the
Stafford Act, is now the same for both
loan programs, FEMA proposes to use
the same cancellation requirements and
procedures for both loan programs to
reduce confusion for the regulated
public and reviewing officials.
FEMA may cancel ‘‘* * * all or any
part of Special Community Disaster
Loans to the extent that revenues of the
local government during the three full
fiscal year period following the major
disaster are insufficient to meet the
operating budget of the local
government, including additional
disaster-related expenses of a municipal
operation character.’’ 42 U.S.C. 5184(c).
For loan cancellation purposes, FEMA
interprets the term ‘‘operating budget’’
to mean actual revenues and
expenditures of the local government as
published in the official financial
statements of the local government.
Under the proposed cancellation
procedures, the FEMA Assistant
Administrator for the Disaster
Assistance Directorate (Assistant
Administrator) would review the
Application for Loan Cancellation and a
financial evaluation of the applicant to
evaluate the local government’s
revenues and determine whether FEMA
should cancel, in whole or in part, a
Special CDL issued under the 2005 or
2006 Acts. FEMA would cancel a part
of a loan, as opposed to the whole, in
situations where the community’s
application for cancellation reflects that
the community’s revenues are not
sufficient to repay the entire loan, but
are sufficient to repay a portion thereof.
As limited by the Stafford Act, a
community’s eligibility for cancellation
is based on a fixed period of time. The
Assistant Administrator’s decision must
be based on the revenues of the local
government during the three full fiscal
year period following the major disaster.
This means that since Hurricane Katrina
occurred in August 2005, eligibility for
cancellation can only be based on the
revenues of the local government during
the following three full fiscal years. The
typical ‘‘fiscal year,’’ as used by the
Federal government, runs from October
1 to September 30. Under this model,
the three full fiscal year period after
Hurricanes Rita and Katrina ended on
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that operate under a different fiscal year,
however, FEMA would modify the
three-year period to reflect the 36
calendar months following the disaster.
All of the Special CDLs are three-year
loans that may be drawn upon by the
local community at its discretion. Once
an amount is drawn down, interest
begins to accrue on the loan from the
date it is dispersed. Although
communities may voluntarily make
payments on the loan at any time,
communities are not required to repay
the loan or any related interest until five
years after the date of the promissory
note, unless otherwise extended by the
Assistant Administrator. None of the
loans referenced above will come due
until October 2010 at the earliest. As of
January 2009, two communities have
voluntarily paid their loans in full,
including accrued interest.
Communities applying for
cancellation would be required to
submit their Application for Loan
Cancellation before the expiration date
of their loan. This would allow FEMA
the opportunity to cancel all or a part
of the loan and forgive all related
interest before the loan must be repaid.
As long as the community applies for
and is granted cancellation before the
date its loan expires, then all interest on
the amount of the loan that is cancelled
would be forgiven regardless of the date
that the amount was dispersed or the
date that cancellation is granted.
If the Assistant Administrator
determines that all or part of a
community’s Special CDL should be
cancelled, the amount of principal
would be cancelled, and the related
interest would be forgiven. The
Assistant Administrator’s determination
concerning loan cancellation would
specify that any uncancelled principal
and related interest must be repaid in
accordance with the terms and
conditions of the promissory note; and
that, if repayment will constitute a
financial hardship, the local government
must submit for FEMA review and
approval, a repayment schedule for
settling the indebtedness on timely
basis. Such repayments would be
required to be made to the Treasurer of
the United States and be sent to FEMA,
Attention: Office of the Chief Financial
Officer. A loan or cancellation of a loan
would not reduce or affect other
disaster-related grants or other disaster
assistance. However, FEMA will not
make any cancellation that would result
in a duplication of benefits to the
applicant.
If the tax and other revenue rates or
the tax assessment valuation of property
which was not damaged or destroyed by
the disaster are reduced in the three

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fiscal years subsequent to the major
disaster, the tax and other revenue rates
and tax assessment valuation factors
applicable to such property in effect at
the time of the major disaster would be
used without reduction for purposes of
computing revenues received. This may
result in decreasing the potential for
loan cancellations.
If the local government transfers
funds from its operating funds accounts
to its capital funds account, utilizes
operating funds for other than routine
maintenance purposes, or significantly
increases expenditures which are not
disaster related, except increases due to
inflation, the annual operating budget or
operating statement expenditures would
be reduced accordingly for purposes of
evaluating any request for loan
cancellation.
It is not the purpose of these loan
programs to underwrite pre-disaster
budget or actual deficits of the local
government. Consequently, such deficits
carried forward would reduce any
amounts otherwise eligible for loan
cancellation.
If FEMA disapproves an Application
for Loan Cancellation, in whole or in
part, the local government would be
allowed to appeal and submit any
additional information in support of the
application within 60 days of the date
of disapproval. The decision of the
Assistant Administrator or designee
would be final on the appeal of any
disapproval of an application for
cancellation.
The cancellation provisions would
retroactively apply to the dates of
enactment of the 2005 and 2006 Acts, so
these proposed regulations would apply
to all of the Special CDLs awarded by
FEMA.
III. Regulatory Requirements
A. Executive Order 12866, Regulatory
Planning and Review
Under Executive Order 12866,
‘‘Regulatory Planning and Review,’’ 58
FR 51735 (Oct. 4, 1993), a ‘‘significant
regulatory action’’ is subject to Office of
Management and Budget (OMB) review
and the requirements of Executive Order
12866. Section 3(f) of the Executive
Order defines ‘‘significant regulatory
action’’ as one that is likely to result in
a rule that may:
(1) Have an annual effect on the
economy of $100 million or more, or
may adversely affect in a material way
the economy, a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
State, local or tribal governments or
communities;

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(2) Create a serious inconsistency or
otherwise interfere with an action taken
or planned by another agency;
(3) Materially alter the budgetary
impact of entitlements, grants, user fees,
or loan programs, or the rights and
obligations of recipients thereof; or
(4) Raise novel legal or policy issues
arising out of legal mandates, the
President’s priorities, or the principles
set forth in the Executive Order.
This rule is an economically
significant regulatory action under
section 3(f) of Executive Order 12866
because it is expected to have an annual
effect on the economy of more than
$100 million, and materially alter the
budgetary impact of the Special
Community Disaster Loans Program.
Accordingly, OMB has reviewed this
rule.
As previously stated, the 2005 Act
authorized FEMA to transfer funds
appropriated in the Second Emergency
Supplemental Appropriations Act To
Meet Immediate Needs Arising From
The Consequences Of Hurricane
Katrina, 2005, (Pub. L. 109–62), to
support up to $1 billion in loan
authority to assist communities
impacted by Hurricanes Katrina and
Rita. Loans issued under the 2005 Act
are referred to as Special Community
Disaster Loans. The next year, the 2006
Act appropriated funds to support an
additional $371,733,000 in loan
authority in addition to loans
authorized under the 2005 Act. Both the
2005 and 2006 Acts made the loan
cancellation provision of section
417(c)(1) of the Stafford Act
inapplicable, meaning FEMA had no
authority to cancel these loans.
The 2007 Act removes the loan
cancellation prohibitions contained in
the 2005 and 2006 Acts. The
amendment retroactively applies to the
date of enactment of both the 2005 and
2006 Acts. This statutory change now
gives FEMA discretionary authority,
limited by the language in section
417(c)(1) of the Stafford Act, to cancel
Special Community Disaster Loans
issued pursuant to either the 2005 or
2006 Acts.
Under the 2005 Act, FEMA made 52
loans totaling $261,135,806 in
Mississippi and 84 loans totaling
$738,864,194 in Louisiana. In total, $1
billion of the $1 billion loan level
authorized in the 2005 Act was
provided to eligible applicants
devastated by Hurricanes Katrina and
Rita. Under the 2006 Act, FEMA made
four additional loans totaling $9,485,908
in Mississippi and twelve additional
loans totaling $261,015,333 in
Louisiana. In total, $270,501,241 of the
$371,733,000 loan level authorized in

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the 2006 Act was provided to eligible
applicants devastated by Hurricanes
Katrina and Rita. No additional eligible
applicants were identified prior to the
September 30, 2006 deadline for the
remaining $101,231,759 of the loan
authority.
As a result of the 2005 and 2006 Acts,
FEMA made 152 Special Community
Disaster Loans totaling $1,270,501,241
to 109 eligible applicants in Mississippi
and Louisiana. The application period
for these loans has closed, so no
additional local governments can be
granted loans under these programs. If
all 152 loan recipients applied for and
were found eligible for full cancellation
under these proposed procedures, up to
$1,270,501,241, plus any applicable
interest and costs, could be cancelled.
However, because the Special
Community Disaster Loans operate as
lines of credit from which applicants
justifying need draw down, not all of
the loan funds obligated have been
distributed. As of March 16, 2009, only
$831 million (approximately 65% of the
total amount awarded) has been drawn
down by applicants. FEMA expects that
all communities with Special
Community Disaster Loans will apply
for cancellation because of the benefits
cancellation could have assisting in the
recovery of communities. Because
FEMA cannot evaluate the individual
financial situations of the communities
without reviewing the data that would
be submitted in the applications for
cancellation, FEMA cannot predict at
this time how many of those
communities will be eligible for
cancellation. FEMA solicits public input
on this issue.
The purpose of this rule is to
implement the cancellation provisions
outlined in the 2007 Act which allow
for the cancellation of Special
Community Disaster Loans for those
communities whose revenues during the
full three-fiscal-year period following
the major disaster are insufficient to
meet the operating budget of the local
government. The cancellation
provisions apply only to Special
Community Disaster Loans issued under
the 2005 and 2006 Acts. Community
Disaster Loans issued prior to the
enactment of the 2005 or 2006 Acts, or
other loans not issued under the
authority of those Acts, are not affected
by this rule. Consequently, this rule will
have no impact on local governments
that do not have a Special Community
Disaster Loan.
FEMA proposes to use the
cancellation procedures already familiar
to communities who received
traditional Community Disaster Loans.
These procedures are located at 44 CFR

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15231

206.366 and have been used by loan
recipients since 1990. In assessing the
budgetary impact of using an alternative
procedure, FEMA considered the effect
of possible changes to these wellestablished cancellation procedures.
In considering alternatives, FEMA
first considered the automatic
cancellation of all Special Community
Disaster Loans. However, the text of the
statute and the legislative history show
that Congress did not automatically
forgive these loans, but allows for
partial or full forgiveness of community
disaster loan repayments if, after three
years, local revenue remains insufficient
to meet operating expenses. Next, FEMA
considered revising the documents
submitted by the local communities to
prove that local revenue is insufficient
to meet operating expenses. FEMA
opted to retain the requirements used
for the traditional Community Disaster
Loan program that have proven accurate
and efficient in determining whether
local communities meet the
requirements for cancellation of
traditional Community Disaster Loans.
Furthermore, the alternatives
considered did not have a measurable
effect on Federal costs and did not
simplify program administration or
consolidate or clarify existing
definitions, procedures, or processes.
Finally, the creation of additional or
revised regulatory requirements would
not be in concert with the intention of
providing forgiveness consistent with
previous disasters.
FEMA has found during the past 19
years that the cancellation provisions
for the traditional Community Disaster
Loan program work—they provide
sufficient and accurate information on
which FEMA can base its decision to
cancel loans—and compliance on the
part of the borrower is relatively easy.
There are no significant issues with
these existing procedures that require
revision; however, those affected by
these regulations are encouraged to
identify problems and suggest solutions
to those problems during the public
comment period for this rule.
Communities affected by these
regulations have already received the
Special Community Disaster Loans.
Therefore, these communities already
have established systems and
procedures in place to meet the loan
maintenance and servicing requirements
in 44 CFR 206.375(c). The documents
already required under that paragraph
meet some of the proposed financial
information submission requirements
for cancellation. The proposed
administrative requirements for loan
cancellation should not be too
burdensome for either the loan

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applicant or FEMA. The documents that
must be provided in an Application for
Loan Cancellation would include: (1)
Annual operating budgets for the fiscal
year of the disaster and the three
subsequent fiscal years (States and local
governments should already have
annual operating budgets as a matter of
practice; therefore, this element should
create no new burden on the
applicants); (2) annual financial reports
for the fiscal year of the disaster and the
three subsequent fiscal years (these
annual financial reports are already
required to be submitted by 44 CFR
206.375(c), and should create no new
burden on the applicants); (3) the
following information concerning
annual real estate property taxes
pertaining to the community for the
fiscal year of the disaster and the three
subsequent fiscal years: the market
value of the tax base, the assessment
ratio, the assessed valuation, the tax
levy rate and the taxes levied and
collected (pursuant to pertinent State
statutes, ordinances, regulations which
prescribe the local government’s system
of budgeting, accounting and financial
reporting in 44 CFR 206.374(b)(1)(ii)(B),
and revised OMB Circular A–133,
‘‘Audits of States, Local Governments,
and Non-Profit Organizations,’’ 44 CFR
13.26, local governments receiving loans
must be audited annually; the
information required to be submitted
with the Application for Loan
Cancellation is standard information
contained in the annual financial
reports resulting from these annual
audits); (4) audit reports for the fiscal
year of the disaster and the 3 subsequent
fiscal years certifying to the validity of
the operating statements (this is a
standard element of the annual audit
report and the requirement to provide
this information should create no new
burden on the applicant); and (5) other
financial information specified in the
Application for Loan Cancellation,
which includes information such as
unreimbursed disaster-related expenses.
The burden on the public is low with
respect to new administrative
requirements associated with submitting
the Application for Loan Cancellation.
FEMA estimates that the annual
estimated cost to submit the Application
for Loan Cancellation to be $4,850.32.
FEMA made 152 Special Community
Disaster Loans to 109 eligible applicants
in Mississippi and Louisiana. Because
the documents required to be submitted
with an Application for Loan
Cancellation are documents that each
local government should already
possess, FEMA estimates that it would
take an average of 1 hour for local

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14:15 Apr 02, 2009

Jkt 217001

governments to prepare the Application
for Loan Cancellation. Using wage rates
from the U.S. Department of Labor,
Bureau of Labor Statistics (BLS),
Standard Occupation Classification
(SOC) System, the median hourly wage
for Emergency Management Specialists
in Business and Financial Operations
(SOC Code Number 13.1061) is $22.79
per hour. Adding 40 percent to the BLS
figure to account for benefits, FEMA has
calculated the burden using a wage rate
of $31.91 per hour. Since there are a
total of 152 Special Community Disaster
Loans, it is estimated that the one time
cost of compliance to submit the
Application for Loan Cancellation for all
loans is $4,850.32. This figure is
calculated as follows: ((152 × 1) ×
$31.91).
If all 152 loan recipients applied, and
were found eligible, for full cancellation
under these proposed procedures, up to
$1,270,501,241, plus any applicable
interest and costs, could be cancelled,
although as of March 16, 2009 only $831
million of that amount had been drawn
down. Any funds cancelled will have a
positive effect on the State and local
economy by reducing on-going
operating expenses related to the loan,
as well as the debt for the loan.
Although not a grant, the cancellation of
these loans would affect the Federal
government’s budget much like a grant.
The loans were originally provided out
of the Federal Treasury. If the local
governments’ revenues are found to be
insufficient to meet its operating budget,
the principal amount of the loan and the
related interest would be forgiven. The
economic impact would be a transfer
payment from the Federal government
to the local government whose loan was
cancelled.
The overall impact of this rule is,
therefore, the cost to the applicant to
apply for the cancellation, as well as the
impact on the economy of potentially
forgiving all Special Community
Disaster Loans and any related interest
and costs. The maximum total economic
impact of this rule is approximately $1.3
billion (conservatively assuming that all
funds awarded will be drawn down, and
exclusive of any interest that may also
be forgiven). However, without knowing
the dollar amounts or even the number
of loans that will be cancelled, it is
impossible to predict the amount of the
economic impact of this rule with any
precision. Although the impact of the
rule could be spread over multiple years
as applications are received, processed,
and loans cancelled, the total economic
effect of a specific loan cancellation
would only occur once, rather than
annually.

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B. Regulatory Flexibility Act
Under the Regulatory Flexibility Act
(5 U.S.C. 601–612), we have considered
whether this proposed rule would have
a significant economic impact on a
substantial number of small entities.
The term ‘‘small entities’’ comprises
small businesses, not-for-profit
organizations that are independently
owned and operated and are not
dominant in their fields, and
governmental jurisdictions with
populations of less than 50,000.
FEMA certifies under 5 U.S.C. 605(b)
that this proposed rule would not have
a significant economic impact on a
substantial number of small entities.
Section 601(5) defines small
governmental jurisdictions as
governments of cities, counties, towns,
townships, villages, school districts, or
special districts with a population of
less than 50,000. This proposed rule
would affect the following entities,
some of which might be small entities:
The 109 eligible applicants devastated
by Hurricanes Katrina and Rita located
in Mississippi and Louisiana that
received Special Community Disaster
Loans authorized in the 2005 and 2006
Acts. This proposed rule will not
impose any additional requirements on
local governments that do not have a
Special Community Disaster Loan.
As stated previously, the potential for
loan cancellation under the proposed
procedures would not have a negative
impact on any loan applicant as any
funds cancelled will have a positive
beneficial effect on the State and local
governments by reducing on-going
operating expenses and debt related to
the loan. We have previously explained
that State and local governments that
choose to seek loan cancellation
consideration will need to spend a
minimal amount of staff time preparing
the required application. Such a
minimal staffing burden is not
considered to be a significant economic
impact. Consequently, this proposed
rule would not have a significant
economic impact on a substantial
number of small entities.
If you think that your business,
organization, or governmental
jurisdiction qualifies as a small entity
and that this rule would have a
significant economic impact on it,
please submit a comment (See
ADDRESSES) explaining why you think it
qualifies and how and to what degree
this rule would economically affect it.
C. Unfunded Mandates Reform Act of
1995
The Unfunded Mandates Reform Act
of 1995 (2 U.S.C. 1531–1538) requires

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Federal Register / Vol. 74, No. 63 / Friday, April 3, 2009 / Proposed Rules
Federal agencies to assess the effects of
their discretionary regulatory actions. In
particular, the Unfunded Mandates
Reform Act addresses actions that may
result in the expenditure by a State,
local, or tribal government, in the
aggregate, or by the private sector, of
$100,000,000 or more in any one year.
FEMA does not expect this rule to result
in such expenditure since loan
recipients applying for potential
cancellation of a Special Community
Disaster Loan will not result in any
expenditure not already assumed.
Additionally, this rule is expected to
provide a benefit to the local
governments by allowing for the
cancellation of Special Community
Disaster Loans for those communities
whose revenues during the full threefiscal-year period following the major
disaster are insufficient to meet the
operating budget of the local
government. FEMA discusses this rule’s
effects elsewhere in this preamble.
D. Executive Order 13132, Federalism
This rule will not have substantial
direct effects on the States, on the
relationship between the National
Government and the States, or on the
distribution of power and
responsibilities among the various
levels of government. It will not
preempt any State laws. Eligible
applicants who may apply for loan
cancellation under these proposed
procedures do so voluntarily and State
policy making discretion is not affected.
In accordance with section 6 of
Executive Order 13132, FEMA
determines that this rule will not have
Federalism implications sufficient to
warrant the preparation of a Federalism
impact statement.
E. National Environmental Policy Act
FEMA’s regulations implementing the
National Environmental Policy Act of
1969 (42 U.S.C. 4321 et seq.) at 44 CFR
10.8(d)(2)(ii) categorically exclude the
preparation, revision, adoption of
regulations, directives, manuals, and
other guidance documents related to
actions that qualify for categorical
exclusions. Moreover, the changes being
proposed in this rule constitute actions
that enforce existing Federal

regulations, (44 CFR 10.8(d)(2)(iv)), and
involve emergency and disaster
response and recovery activities under
section 417 of the Stafford Act (44 CFR
10.8(d)(2)(xix)(K)). This rulemaking will
not have a significant effect on the
human environment and, therefore,
neither an environmental assessment
nor an environmental impact statement
is required.
F. Paperwork Reduction Act of 1995
In the October 19, 2005 interim rule
(at 70 FR 60442; also 44 CFR 206.370–
206.377), FEMA determined that
implementation of the interim rule
would be subject to the Paperwork
Reduction Act of 1995 (PRA) (44 U.S.C.
3501–3520). With the interim rule,
FEMA submitted two information
collection requests to OMB for review
and clearance in accordance with the
review procedures of the PRA. OMB
approved the requested revision of the
collection entitled ‘‘Application for
Community Disaster Loan (CDL)
Program and the Special Community
Disaster Loan (SCDL) Program,’’ which
was assigned OMB Control Number
1660–0083 and expires on June 30,
2009. This proposed rule does not
contain any changes that would affect
that currently approved collection.
OMB also approved the collection
entitled ‘‘Application for Community
Disaster Loan Cancellation’’ which was
assigned OMB Control Number 1660–
0082 and expires on January 31, 2010.
That collection uses FEMA Form 90–5,
Application for Loan Cancellation,
which has an annual number of
respondents of 1 (the number of
communities who apply for cancellation
of a Community Disaster Loan under the
existing procedures in 44 CFR 206.366).
It is intended that applicants seeking
cancellation of a Special Community
Disaster Loan will use the same form
submitted for Community Disaster
Loans. Because FEMA proposes to
implement the same cancellation
procedures for Special Community
Disaster Loans as already exist for the
Community Disaster Loan program,
FEMA proposes to amend that existing
collection to increase the number of
respondents to 153. This number
reflects the 1 Community Disaster Loan

cancellation application already
received annually under the Community
Disaster Loan program, and the
potential 152 applications for
cancellation of Special Community
Disaster Loans as proposed in this rule.
Accordingly, in this proposed rule,
FEMA is seeking a revision to the
already existing collection of
information OMB Control Number
1660–0082, to include the cancellation
of Special Community Disaster Loans.
This proposed rule serves as the 60 day
comment period for this proposed
change pursuant to 5 CFR 1320.12.
FEMA invites the general public to
comment on the proposed collection of
information.
Collection of Information
Title: Application for Community
Disaster Loan Cancellation.
Type of Information Collection:
Revision of a currently approved
collection.
OMB Number: 1660–0082.
Form Numbers: FEMA Form 90–5.
Abstract: Local governments may
submit an Application for Loan
Cancellation through the Governor’s
Authorized Representative to the FEMA
Regional Administrator prior to the
expiration date of the loan. FEMA has
the authority to cancel repayment of all
or part of a Community Disaster Loan or
a Special Community Disaster Loan to
the extent that a determination is made
that revenues of the local government
during the three fiscal years following
the disaster are insufficient to meet the
operating budget of that local
government because of disaster-related
revenue losses and additional
unreimbursed disaster-related
municipal operating expenses.
Operating budget means actual revenues
and expenditures of the local
government as published in the official
financial statements of the local
government.
Affected Public: State, local or tribal
governments.
Number of Respondents: 153.
Frequency of Response: 1 per year.
Hour Burden per Response: 1 hour.
Estimated Total Annual Burden
Hours: 153 hours.

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TABLE A.12—ESTIMATED ANNUALIZED BURDEN HOURS AND COSTS
Type of
respondent

Form name/form number

State, local
and Tribal
Government.

Application for Loan Cancellation/FEMA Form
90–5 (under 44 CFR
206.366 as currently
approved by OMB).

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14:15 Apr 02, 2009

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Number of responses per
respondent

Number of
respondents
1

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Avg. burden
per response
(in hours)

1

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Total annual
burden
(in hours)

1

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Avg. hourly
wage rate
1

03APP1

$31.91

Total annual
respondent
cost
$31.91

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TABLE A.12—ESTIMATED ANNUALIZED BURDEN HOURS AND COSTS—Continued
Number of
respondents

Avg. burden
per response
(in hours)

Total annual
burden
(in hours)

State, local
and Tribal
Government.

Application for Loan Cancellation/FEMA Form
90–5 (under 44 CFR
206.376 the change
associated with this
rule).

152

1

1

152

$31.91

$4,850.32

Total ............

.........................................

153

........................

........................

153

........................

$4,882.23

FOR FURTHER INFORMATION CONTACT:
Contact Gerald Connelly, (202) 646–
3638 for additional information
regarding this information collection.
You may contact the Records
Management Branch for copies of the
proposed collection of information at
facsimile number (202) 646–3347 or
e-mail address: [email protected].

Jkt 217001

List of Subjects in 44 CFR Part 206
Administrative practice and
procedure, Coastal zone, Community
facilities, Disaster assistance, Fire
prevention, Grant programs—housing
and community development, Housing,
Insurance, Intergovernmental relations,
Loan programs—housing and
community development, Natural
resources, Penalties, Reporting and
recordkeeping requirements.
For the reasons discussed in the
preamble, FEMA proposes to amend 44
CFR part 206 as follows:

1. The authority citation for part 206
continues to read as follows:

This rule will not affect a taking of
private property or otherwise have
taking implications under Executive
Order 12630, Governmental Actions and
Interference with Constitutionally
Protected Property Rights.

14:15 Apr 02, 2009

I. Executive Order 13175, Consultation
and Coordination With Indian Tribal
Governments
Because no Special Community
Disaster Loans were made to Indian
Tribal Governments, this rule does not
have tribal implications under
Executive Order 13175, Consultation
and Coordination with Indian Tribal
Governments. This rule would not have
a substantial direct effect on one or
more Indian tribes, on the relationship
between the Federal Government and
Indian tribes, or on the distribution of
power and responsibilities between the
Federal Government and Indian tribes.

PART 206—FEDERAL DISASTER
ASSISTANCE

G. Executive Order 12630, Taking of
Private Property

VerDate Nov<24>2008

H. Executive Order 12988, Civil Justice
Reform
This rule meets applicable standards
in sections 3(a) and 3(b)(2) of Executive
Order 12988, Civil Justice Reform, to
minimize litigation, eliminate
ambiguity, and reduce burden.

Authority: Robert T. Stafford Disaster
Relief and Emergency Assistance Act, 42
U.S.C. 5121 through 5207; 119 Stat. 2061;
Reorganization Plan No. 3 of 1978, 43 FR
41943, 3 CFR, 1978 Comp., p. 329; Homeland
Security Act of 2002, 6 U.S.C. 101; E.O.
12127, 44 FR 19367, 3 CFR, 1979 Comp., p.
376; E.O. 12148, 44 FR 43239, 3 CFR, 1979
Comp., p. 412; and E.O. 13286, 68 FR 10619,
3 CFR, 2003 Comp., p. 166.

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Avg. hourly
wage rate

Total annual
respondent
cost

Form name/form number

Estimated Cost: $0. There are no startup, operational or other costs associated
with this information collection in
addition to the burden hour cost noted
in the table above.
Comments: Written comments are
solicited to (a) evaluate whether the
proposed data collection is necessary for
the proper performance of the agency,
including whether the information shall
have practical utility; (b) evaluate the
accuracy of the agency’s estimate of the
burden of the proposed collection of
information, including the validity of
the methodology and assumptions used;
(c) enhance the quality, utility, and
clarity of the information to be
collected; and (d) minimize the burden
of the collection of information on those
who are to respond, including through
the use of appropriate automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology,
e.g., permitting electronic submission of
responses.
Interested persons are invited to
submit written comments on the
information collection through one of
the methods listed in ADDRESSES above
on or before June 2, 2009.

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Number of responses per
respondent

Type of
respondent

2. Revise § 206.370 to read as follows:
§ 206.370

Purpose and scope.

(a) Purpose. Sections 206.370 through
206.377 provide procedures for local
governments and State and Federal
officials concerning the Special
Community Disaster Loans program
under section 417 of the Stafford Act (42
U.S.C. 5184), the Community Disaster
Loan Act of 2005, Public Law 109–88,
and the Emergency Supplemental
Appropriations Act for Defense, the
Global War on Terror, and Hurricane
Recovery, 2006, Public Law 109–234.
(b) Scope. Sections 206.370 through
206.377 apply only to Special
Community Disaster Loans issued under
the Community Disaster Loan Act of
2005, Public Law 109–88, and the
Emergency Supplemental
Appropriations Act for Defense, the
Global War on Terror, and Hurricane
Recovery, 2006, Public Law 109–234.
3. In § 206.371, revise the last
sentence of paragraph (f), paragraph (g)
and add new paragraph (h) to read as
follows:
§ 206.371

Loan program.

*

*
*
*
*
(f) * * * Neither the loan nor any
cancelled portion of the loans may be
used as the non-Federal share of any
Federal program, including those under
the Stafford Act.
(g) Relation to other assistance. Any
Special Community Disaster Loans
including cancellations of loans made
under this subpart shall not reduce or
otherwise affect any commitments,
grants, or other assistance provided
under the authority of the Stafford Act
or this part.
(h) Cancellation. The Assistant
Administrator for the Disaster
Assistance Directorate shall cancel
repayment of all or part of a Special
Community Disaster Loan to the extent
that he/she determines that revenues of
the local government during the 3 fiscal
years following the disaster are
insufficient to meet the operating budget
of that local government because of

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disaster-related revenue losses and
additional unreimbursed disasterrelated municipal operating expenses.
4. In § 206.372 revise paragraphs (a),
(c), (d) and (e) to read as follows:

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§ 206.372

Responsibilities.

(a) The local government shall submit
the financial information required by
FEMA in the application for a
Community Disaster Loan or other
format specified by FEMA and comply
with the assurances on the application,
the terms and conditions of the
Promissory Note in the application for
loan cancellation, if submitted, and
§§ 206.370 through 206.377. The local
government shall send all loan
application, loan administration, loan
cancellation, and loan settlement
correspondence through the Governor’s
Authorized Representative (GAR) and
the FEMA Regional Office to the FEMA
Assistant Administrator for the Disaster
Assistance Directorate.
*
*
*
*
*
(c) The Regional Administrator or
designee shall review each loan
application or loan cancellation request
received from a local government to
ensure that it contains the required
documents and transmit the application
to the Assistant Administrator for the
Disaster Assistance Directorate. He/she
may submit appropriate
recommendations to the Assistant
Administrator for the Disaster
Assistance Directorate.
(d) The Assistant Administrator for
the Disaster Assistance Directorate or a
designee, shall execute a Promissory
Note with the local government and
shall administer the loan until
repayment or cancellation is completed
and the Promissory Note is discharged.
(e) The Assistant Administrator for
the Disaster Assistance Directorate or
designee shall approve or disapprove
each loan request, taking into
consideration the information provided
in the local government’s request and
the recommendations of the GAR and
the Assistant Administrator for the
Disaster Assistance Directorate. The
Assistant Administrator for the Disaster
Assistance Directorate or designee shall
approve or disapprove a request for loan
cancellation in accordance with the
criteria for cancellation in these
regulations.
*
*
*
*
*
5. In § 206.374, add a sentence at the
end of paragraph (b)(2) to read as
follows:
§ 206.374

*

Loan application.

*
*
(b) * * *

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*

*

14:15 Apr 02, 2009

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(2) * * * For loan cancellation
purposes, FEMA interprets the term
‘‘operating budget’’ to mean actual
revenues and expenditures of the local
government as published in the official
financial statements of the local
government.
*
*
*
*
*
6. Add § 206.376 to read as follows:
§ 206.376

Loan cancellation.

(a) General. (1) FEMA shall cancel
repayment of all or part of a Special
Community Disaster Loan to the extent
that the Assistant Administrator for the
Disaster Assistance Directorate
determines that revenues of the local
government during the full three fiscal
year period following the disaster are
insufficient, as a result of the disaster,
to meet the operating budget for the
local government, including additional
unreimbursed disaster-related expenses
for a municipal operating character. For
loan cancellation purposes, FEMA
interprets the term operating budget to
mean actual revenues and expenditures
of the local government as published in
the official financial statements of the
local government.
(2) If the tax and other revenues rates
or the tax assessment valuation of
property which was not damaged or
destroyed by the disaster are reduced
during the 3 fiscal years subsequent to
the major disaster, the tax and other
revenue rates and tax assessment
valuation factors applicable to such
property in effect at the time of the
major disaster shall be used without
reduction for purposes of computing
revenues received.
(3) If the local government’s fiscal
year is changed during the ‘‘full 3 year
period following the disaster’’ the actual
period will be modified so that the
required financial data submitted covers
an inclusive 36-month period.
(4) If the local government transfers
funds from its operating funds accounts
to its capital funds account, utilizes
operating funds for other than routine
maintenance purposes, or significantly
increases expenditures which are not
disaster related, except increases due to
inflation, the annual operating budget or
operating statement expenditures will
be reduced accordingly for purposes of
evaluating any request for loan
cancellation.
(5) It is not the purpose of this loan
program to underwrite predisaster
budget or actual deficits of the local
government. Consequently, such deficits
carried forward will reduce any
amounts otherwise eligible for loan
cancellation.
(6) The provisions of this section
apply to all Special Community Disaster

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loans issued from the dates of
enactment of Public Law 109–88 and
Public Law 109–234.
(b) Disaster-related expenses of a
municipal operation character. (1) For
purposes of this loan, unreimbursed
expenses of a municipal operating
character are those incurred for general
government purposes, including but not
limited to police and fire protection,
trash collection, collection of revenues,
maintenance of public facilities, flood
and other hazard insurance.
(2) Disaster-related expenses do not
include expenditures associated with
debt service, any major repairs,
rebuilding, replacement or
reconstruction of public facilities or
other capital projects, intragovernmental
services, special assessments, and trust
and agency fund operations. Disaster
expenses which are eligible for
reimbursement under project
applications or other Federal programs
are not eligible for loan cancellation.
(3) Each applicant shall maintain
records including documentation
necessary to identify expenditures for
unreimbursable disaster-related
expenses. Examples of such expenses
include but are not limited to:
(i) Interest paid on money borrowed
to pay amounts FEMA does not advance
toward completion of approved Project
Applications.
(ii) Unreimbursed costs to local
governments for providing usable sites
with utilities for mobile homes used to
meet disaster temporary housing
requirements.
(iii) Unreimbursed costs required for
police and fire protection and other
community services for mobile home
parks established as the result of or for
use following a disaster.
(iv) The cost to the applicant of flood
insurance required under Public Law
93–234, as amended, and other hazard
insurance required under section 311,
Public Law 93–288, as amended, as a
condition of Federal disaster assistance
for the disaster under which the loan is
authorized.
(4) The following expenses are not
considered to be disaster-related for
Special Community Disaster Loan
purposes:
(i) The local government’s share for
assistance provided under the Stafford
Act including flexible funding under
section 406(c)(1) of the Act (42 U.S.C.
5172).
(ii) Improvements related to the repair
or restoration of disaster public facilities
approved on Project Applications.
(iii) Otherwise eligible costs for which
no Federal reimbursement is requested
as a part of the applicant’s disaster
response commitment, or cost sharing as

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specified in the FEMA–State Agreement
for the disaster.
(iv) Expenses incurred by the local
government which are reimbursed on
the applicant’s project application.
(c) Cancellation application. A local
government which has drawn loan
funds from the U.S. Treasury may
request cancellation of the principal and
related interest by submitting an
Application for Loan Cancellation
through the Governor’s Authorized
Representative to the Regional
Administrator prior to the expiration
date of the loan.
(1) Financial information submitted
with the application shall include the
following:
(i) Annual Operating Budgets for the
fiscal year of the disaster and the 3
subsequent fiscal years;
(ii) Annual Financial Reports
(Revenue and Expense and Balance
Sheet) for each of the above fiscal years.
Such financial records must include
copies of the local government’s annual
financial reports, including operating
statements balance sheets and related
consolidated and individual
presentations for each fund account. In
addition, the local government must
include an explanatory statement when
figures in the Application for Loan
Cancellation form differ from those in
the supporting financial reports.
(iii) The following additional
information concerning annual real
estate property taxes pertaining to the
community for each of the above fiscal
years:
(A) The market value of the tax base
(dollars);
(B) The assessment ratio (percent);
(C) The assessed valuation (dollars);
(D) The tax levy rate (mils);
(E) Taxes levied and collected
(dollars).
(iv) Audit reports for each of the
above fiscal years certifying to the
validity of the Operating Statements.
The financial statements of the local
government shall be examined in
accordance with generally accepted
auditing standards by independent
certified public accountants. The report
should not include recommendations
concerning loan cancellation or
repayment.
(v) Other financial information
specified in the Application for Loan
Cancellation.
(2) Narrative justification. The
application may include a narrative
presentation to supplement the financial
material accompanying the application
and to present any extenuating
circumstances which the local
government wants the Assistant
Administrator for the Disaster

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Assistance Directorate to consider in
rendering a decision on the cancellation
request.
(d) Determination. (1) If, based on a
review of the Application for Loan
Cancellation and FEMA audit, the
Assistant Administrator for the Disaster
Assistance Directorate or a designee
determines that all or part of the Special
Community Disaster Loan funds should
be canceled, the amount of principal
canceled and the related interest will be
forgiven. The Assistant Administrator
for the Disaster Assistance Directorate,
or a designee’s determination
concerning loan cancellation will
specify that any uncancelled principal
and related interest must be repaid in
accordance with the terms and
conditions of the Promissory Note, and
that, if repayment will constitute a
financial hardship, the local government
must submit for FEMA review and
approval, a repayment schedule for
settling the indebtedness on timely
basis. Such repayments must be made to
the Treasurer of the United States and
be sent to FEMA, Attention: Office of
the Chief Financial Officer.
(2) A loan or cancellation of a loan
does not reduce or affect other disasterrelated grants or other disaster
assistance. However, no cancellation
may be made that would result in a
duplication of benefits to the applicant.
(3) The uncancelled portion of the
loan must be repaid in accordance with
§ 206.377.
(4) Appeals. If an Application for
Loan Cancellation is disapproved, in
whole or in part, by the Assistant
Administrator for the Disaster
Assistance Directorate or designee, the
local government may submit any
additional information in support of the
application within 60 days of the date
of disapproval. The decision by the
Assistant Administrator for the Disaster
Assistance Directorate or designee on
the additional information is final.
7. Amend § 206.377 by revising the
first sentence of paragraph (b)
introductory text, the last sentence of
paragraph (b)(2), paragraph (b)(4) and
(c)(2) to read as follows:
§ 206.377

Loan repayment.

*

*
*
*
*
(b) Repayment. To the extent not
otherwise cancelled, loan funds become
due and payable in accordance with the
terms and conditions of the Promissory
Note. * * *
*
*
*
*
*
(2) * * * If any portion of the loan is
cancelled, the interest amount due will
be computed on the remaining principal
with the shortest outstanding term.
*
*
*
*
*

PO 00000

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(4) The Assistant Administrator for
the Disaster Assistance Directorate may
defer payments of principal and interest
until FEMA makes its final
determination with respect to any
Application for Loan Cancellation
which the borrower may submit.* * *
*
*
*
*
*
(c) * * *
*
*
*
*
*
(2) The principal amount shall be the
original uncancelled principal plus
related interest less any payments made.
*
*
*
*
*
Dated: March 26, 2009.
Nancy Ward,
Acting Administrator, Federal Emergency
Management Agency.
[FR Doc. E9–7286 Filed 4–2–09; 8:45 am]
BILLING CODE 9110–23–P

FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Part 36
[CC Docket No. 80–286; FCC 09–24]

Jurisdictional Separations and Referral
to the Federal-State Joint Board
AGENCY: Federal Communications
Commission.
ACTION: Proposed rule.
SUMMARY: Jurisdictional separations is
the process by which incumbent local
exchange carriers (incumbent LECs)
apportion regulated costs between the
intrastate and interstate jurisdictions. In
this document, the Commission seeks
comment on extending until June 30,
2010 the current freeze of part 36
category relationships and jurisdictional
cost allocation factors used in
jurisdictional separations, which freeze
would otherwise expire on June 30,
2009. Extending the freeze would allow
the Commission to provide stability for,
and avoid imposing undue burdens on,
carriers that must comply with the
Commission’s separations rules while
the Commission considers issues
relating to comprehensive reform of the
jurisdictional separations process.
DATES: Comments are due on or before
April 17, 2009. Reply comments are due
on or before April 24, 2009.
ADDRESSES: You may submit comments,
identified by WC Docket No. 80–286, by
any of the following methods:
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• Federal Communications
Commission’s Web Site: http://
www.fcc.gov/cgb/ecfs/. Follow the
instructions for submitting comments.

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