WASHINGTON — Tammy Miller of Mountain View said she had trouble breathing when she got the first letter from the Federal Emergency Management Agency last year.
Pay up or face the consequences, the letter said. The agency had given her money to rebuild her home after a series of floods. Now, it said, the payments were given in error, and it wanted its money back.
After months of wrangling and a new law giving the FEMA director the discretion to cancel debts, Miller and nearly 12,000 others are off the hook for the repayments.
So far, the agency has canceled out at least $35 million in outstanding debt.
In April 2008, Miller’s house flooded not once but twice, leaving behind 3 1/2 feet of water, mud and silt.
The damage caused by the swollen White River has long been repaired, thanks in part to a FEMA disasterassistance check for about $20,000, which helped pay for about one-third of Miller’s losses.
But in 2011, the agency wrote her to say that the money had been given in error. Because Stone County didn’t take part in the National Flood Insurance Program, Miller was not authorized to receive assistance, it said, even though FEMA agents were on the scene after the floods offering her help.
“I was completely floored,” she said. “I couldn’t breathe for a few minutes.”
Miller, a 47-year-old nurse who splits time between Little Rock and Mountain View, tried to appeal the collection letter.
“Nobody has 20 grand just lying around, unless you’re a drug dealer,” she said.
It turns out Miller wasn’t the only one who received the letters from FEMA requesting that they pay back money the agency gave in error.
The case of Miller’s neighbors, Gary and Dorothy Guglielmana, caught the eye of U.S. Sen. Mark Pryor, a Democrat from Arkansas.
The Guglielmanas were sent collection notices from FEMA after the agency determined that the $27,000 in disaster-assistance money it gave the couple was given in error. Interest and penalties tacked on to that added $10,000 to their debt.
After Pryor held up Senate consideration of seven U.S. Treasury Department officials in October, the federal government reached an agreement with the Guglielmanas. The terms were not announced, but a Treasury Department spokesman said the couple paid a “compromise amount.”
Under a law that Pryor pushed, 89,000 people who received “Notice of Debt” letters from FEMA were given the opportunity to apply for waivers.
Of the 19,438 people who responded to FEMA by an April 23 deadline, 11,783 have been granted waivers, according to FEMA records produced by Pryor’s office.
The agency is still processing 7,096 waiver applications, and 559 (or 2 percent) of the applications have been denied.
“Hopefully some people ... will be eligible to get some relief and will not have to go through what some families in Arkansas had to go through,” Pryor said in a conference call with reporters.
The senator said 694 Arkansans had received letters from the agency, requesting payment of $3.2 million in total. He did not have figures for how many Arkansans had received waivers so far.
A regional FEMA spokesman referred calls to the agency’s headquarters, which was not able to confirm Pryor’s figures or provide separate figures for Arkansans’ waiver requests.
According to a June Department of Homeland Security Inspector General report, FEMA had granted waivers to 6,167 individuals — 96 percent of the people seeking relief — and granted waivers on debts totaling $35,497,327.
The waiver process was written into a bill by Pryor and was successfully inserted into a spending bill in February by U.S. Sen. Mary Landrieu, a Louisiana Democrat.
The measure gave the FEMA administrator the discretion to waive a person’s debt owed to the federal government if he owed less than $90,000 and received assistance because of a FEMA error.
The law stipulates that people found to be engaging in fraud or abuse are not entitled to have their debts canceled.
The waivers covered disasters starting in August 2008 through December 2010. The Homeland Security Inspector General said that after Hurricanes Katrina and Rita hit the Gulf Coast, “FEMA relaxed its internal controls in order to provide expedited delivery of assistance grants to displaced disaster survivors.”
Pryor called the waiver system a success.
“It’s working,” Pryor said. “What we passed is working.”
Miller said she was perplexed by the original debt letter she received from FEMA.
“There was a mixed message,” she said. “They said ‘Don’t worry, we’ll help you get back on your feet,’ then — Wham.”
She said her reaction to the letter FEMA sent in April forgiving the debt was different. “I’ll keep it probably for the rest of my life,” she said.
Front Section, Pages 1 on 07/19/2012