New York and New Jersey elected officials this week urged federal authorities to waive a rule requiring that property owners return grant money if they win more flood insurance payments on superstorm Sandy claims.
Federal authorities admitted earlier this year that many claims filed after the October 2012 storm had been underpaid and gave Sandy victims until Sept. 15 to reopen their cases.
Disaster grant money is meant to fill in the gaps that private insurance and other funding does not. If more insurance money is granted, it would have to be deducted from other federal aid, according to the federal rule, known as the Stafford Act.
Gov. Andrew M. Cuomo called on U.S. Department of Housing and Urban Development Secretary Julián Castro Thursday to intervene.
"Waiving this requirement is not just smart policy -- it's the right thing to do," Cuomo, who served as HUD secretary during the Clinton administration, said in a news release.
Officials from the Governor's Office of Storm Recovery and all but one member of the New Jersey congressional delegation made similar requests in letters to HUD on Monday. And in late July Sens. Kirsten Gillibrand and Chuck Schumer urged waivers as well.
"These hard-hit New Yorkers had to dig into their own pockets to get through the hard times and they deserve to keep the payments they were unjustly denied in the first place by a dysfunctional flood insurance system," Schumer said in a statement.
HUD officials declined to say if Castro has the authority to issue a waiver. The agency was still preparing a response to the requests, but a HUD spokesman provided an agency statement released after the New York senators sought a waiver, saying HUD was "committed to a fair and rapid resolution of this unique and unfortunate situation."
The time and administrative costs associated with recouping the money were cited as reasons New York requested the waiver, said Lisa Bova-Hiatt, interim executive director of the Governor's Office of Storm Recovery.
As many as 3,900 households have reopened their flood insurance cases in New York. Another 900 applicants have filed lawsuits challenging the payouts. The cost to calculate the duplication and recoup the funds would likely be $1.5 million, state officials said.
"It becomes a tremendous amount of time and money that we are then taking away from the program," Bova-Hiatt said. "It seems almost unfair for a homeowner to go through the process."
Advocates applauded the move to grant waivers.
"It just makes it simpler," said Daniel Strafer, staff attorney at the disaster relief clinic at Touro Law School. "It's more efficient to remove the duplication of benefits."
Ann E. Dibble, director of Storm Response for the nonprofit New York Legal Assistance Group, said the federal rule "is actually holding people back from reopening their claims. This is another very burdensome administrative process that delays money from getting into the hands of people who need it."
Federal Emergency Management Agency Administrator W. Craig Fugate has said the agency would not recoup funds paid to individuals if they receive more flood insurance money, spokesman Rafael Lemaitre said. FEMA individual assistance is separate from HUD money.