Response to correspondence to President Trump, dated November 27, 2018, requesting that the President waive any requirements that Small Business Administration SBA loans are a prohibited duplication of benefit with HUD CDBG.

FAQ#: 17 published 1-3-2019

FEMA U.S. Department of Homeland Security Washington, DC 20528

December 21, 2018

TO: Honorable Jon Bel Edwards
P.O. Box 94004
Baton Rouge, LA 70804

Dear Governor Edwards:

This letter is in response to your correspondence to President Trump, dated November 27, 2018, requesting that the President waive any requirements that Small Business Administration (SBA) loans are a prohibited duplication of benefit with Community Development Block Grant (CDBG) funding. The President requested I respond.

Section 312 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) (42 U.S.C. 5155) prohibits federal agencies from providing disaster relief for a loss in the form of financial assistance for which an individual or entity has received financial assistance under another program, insurance or any other source.

Section 1210(a) of the Disaster Recovery Reform Act (DRRA) (Division D of the FAA Reauthorization Act of 2018, Public Law 115-254) amends Section 312 of the Stafford Act to authorize the President, in certain limited circumstances and at the request of a Governor, to waive a duplication of benefit otherwise prohibited by Section 312. Importantly, the law does not require the President to issue a waiver. Instead, the President may issue a waiver if he determines a waiver is in the public interest and will not result in waste, fraud, or abuse.

The DRRA's amendment to Section 312 also changes what constitutes a duplication under Section 312 by prohibiting the President from considering a loan to be a duplication of benefit, provided that all Federal assistance is used toward a loss suffered as a result of a major disaster or emergency. This change regarding loans is independent of the new waiver provision, and is not subject to a 45-day response period that applies to waivers.

Pursuant to the amended Section 312, an SBA loan is not a prohibited duplication of benefit with a grant provided under the CDBG program, administered by the U.S. Department of Housing and Urban Development (HUD). As such, there is no duplication for the President to waive pursuant to the new Section 312 waiver procedures. However, the DRRA did not direct agencies to make any program or policy changes with respect to whether grant funds could be used for repaying SBA loans. Instead, whether particular federal grant funds are available for the purpose of paying down an SBA loan is a determination reserved for the grant awarding agency, pursuant to its program authorities and appropriations. I am therefore forwarding your request to HUD Secretary Carson for his consideration.

Thank you for your interest in disaster recovery. We look forward to continuing to work with you.

Brock Long

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