Federal Emergency Management Agency Authority To Forgive Claims Against the Government or Accept Government Liability

The General Counsel of the Federal Emergency Management Agency (FEMA) asked whether the Director of that agency had the authority to issue a regulation similar to that issued by the Federal Crop Insurance Corporation and whether such a regulation would conflict with the Claims Collection Act of 1966 or GAO authority. The regulation provides a means for the Corporation to grant relief to persons who might otherwise owe the Government money or be denied benefits because of reliance in good faith on a misrepresentation or error by an agent or employee of the Corporation. In order to grant relief, the Corporation must determine, among other things, that to deny relief would not be fair or equitable. In adopting this regulation, the Corporation relied upon powers and authorities given to it by Congress. These provisions, together with its status as a wholly-owned Government corporation, place it outside many of the rules that apply generally to executive branch agencies. FEMA must look to its own authorities if it is to issue regulations similar to those issued by the Corporation. FEMA is treated as a wholly-owned Government corporation for the purposes of the Federal flood insurance program. If the flood insurance program is run by the Government with the assistance of the insurance industry as FEMA alleges, rather than by the insurance industry with Federal assistance, FEMA can adjust and pay claims for proved and approved losses covered by authorized Federal insurance. It can also make final settlement of any claims or demands arising from financial transactions authorized for the implementation of the flood insurance program. None of these provisions, however, provide a basis for a regulation similar to that issued by the Corporation. These provisions do not authorize FEMA to pay what it is not duly obligated to pay or to forgive claims in its favor. GAO can find no clear statutory basis for FEMA to adopt such a regulation. In the absence of clear statutory authority to forgive a Government claim or authority to accept a Government liability, agencies are without authority to create by regulation procedures that permit them to exercise such authority. Therefore, GAO found that the Director of FEMA does not have the authority to issue a regulation similar to that issued by the Corporation.