FEMA to reimburse disaster-hit towns for loan interest costs

What it does

This bill allows FEMA to reimburse local governments and electric cooperatives for interest payments on loans taken out to fund disaster relief projects. The reimbursement covers the lesser of actual interest paid or what would have been paid at the Federal Reserve prime rate, and applies retroactively to loans from the past 9 years. States have 60 days to apply and must receive reimbursement within 1 year of the bill's enactment.

Why we flagged it

The bill's core function is to reduce interest costs for public entities recovering from disasters by having FEMA reimburse qualifying interest payments. This is a targeted financial assistance measure within the existing Stafford Act framework.

What the text implies

• Retroactive 9-year lookback may create significant unfunded liability if many jurisdictions claim reimbursement for past loans, potentially straining FEMA's budget.
• The 'prime rate' cap creates a subsidy: if local governments borrowed at rates above prime (common for municipal bonds), FEMA covers only the prime-rate portion, effectively subsidizing the difference.
• Electric cooperatives are explicitly included alongside local governments, potentially benefiting private cooperative entities that may have different governance structures than municipalities.
• No explicit cap on total reimbursement amount or per-jurisdiction limits, creating open-ended appropriations exposure.

Who it affects

Local governments and electric cooperatives that borrowed to fund disaster recovery will have interest costs reduced or eliminated, lowering the financial burden on taxpayers in affected communities. This reduces long-term debt service costs for public entities recovering from disasters.

Who stands to gain

• local governments
• electric cooperatives
• municipal bond lenders (reduced default risk)

Named in the bill

FEMA, Federal Emergency Management Agency, Robert T. Stafford Disaster Relief and Emergency Assistance Act, Federal Reserve, local governments, electric cooperatives, States, District of Columbia

Where it stands

18 cosponsors: 14 Republicans, 4 Democrats.

• Apr 10, 2025 — Introduced · Congress.gov: “Introduced in House”
• Apr 10, 2025 — Referred to House Committee on Transportation and Infrastructure · Congress.gov: “Referred to the Subcommittee on Economic Development, Public Buildings, and Emergency Management”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

1 lobbying clients named this bill on 2 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $1,750,000 in lobbying spend. A filing names 42 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 0% of bills with at least one filing.

Neal Dunn, the sponsor, reported $438,583 in PAC receipts in the 2026 cycle.

• National Rural Electric Cooperative Association (nreca) — $1,750,000 on 2 filings

Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.