Flood Insurance Reform Act of 2003

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I am pleased with this legislation and, frankly, with the cooperative spirit that has brought it before us as a suspension. Members may note, there was a change in plans. Originally, we had a unanimous consent agreement to bring this up as a bill with an amendment. We have had conversations. As a result, we have an agreement to go forward with this bill with an amendment. It is a modification that will make the impact a little easier on some people in some areas of the country and will make it in part something of an experiment because we will have to revisit it after a few years, but it will change the essence of the bill.

Our hope is, as a result of the spirit of compromise and flexibility that was shown on this side, when the bill goes elsewhere in this Capitol, there will be a hospitable attitude. There was, frankly, the prospect before that of a possible deadlock between the branches. We believe we have taken a step, well, more than a step, to help avoid that.

The substance is very important, and I want to pay particular tribute to the gentleman from Nebraska (Mr. Bereuter) and the gentleman from Oregon (Mr. Blumenauer). One is a member of the committee, the gentleman from Nebraska (Mr. Bereuter); and one is not, the gentleman from Oregon (Mr. Blumenauer), because they took the initiative. Yes, people who have built in areas that are likely to flood should get some help from the Federal Government. The poor old Federal Government gets denounced a lot in general; but in particular, almost everybody finds some reason to want to substitute it for the pure market forces in some cases.

There is a consensus here that the market does not work for some people with regard to flood insurance. Our position was, however, that we were too little reliant on economic factors. That is, we have had a situation where people could build, be flooded, get compensated through a Federal program; build, get flooded, and get compensated through a Federal program indefinitely. Neither in fiscal terms nor from an environmental standpoint was that a good idea.

This bill is an effort, without cutting people off, to reform that situation. It is widely supported by virtually all of the taxpayer groups that worry about what they think is excessive spending, and it is supported by environmentalists. It is something of a compromise. I hope we can go forward with it and see it adopted.

I should note, this program, the Federal Flood Insurance Program, expired last year. The gentleman from Ohio (Chairman Ney) and I collaborated earlier this year and retroactively extended it. I believe it was the first act this Congress took, was to make sure people were protected. No one is indifferent to the fate of these people.

We did, however, say, and I thank the gentleman for his leadership, that we could not simply continue to extend this program. It had to be reformed. The gentleman from Nebraska (Mr. Bereuter) and the gentleman from Oregon (Mr. Blumenauer) did us a great service by taking the initiative there. It was supported by the gentleman from Ohio (Chairman Ney) and the gentlewoman from California (Ms. Waters), who is the ranking member; and that is where we are.

We have now got a further compromise. I understand that is not yet something they have had a chance to review in the Senate. My hope is what we will do, and I believe there is agreement on this, is to pass a 3-month extension in an appropriate vehicle here, which would then be accepted in the Senate. That would give us until March 31 of next year with the program fully in effect to be able to work out in the Senate what we believe we have successfully worked out here, namely, a reasonable compromise. It is in that spirit that I go forward with this.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 2 minutes to the gentlewoman from Oregon (Ms. Hooley).

Mr. Speaker, I yield 6 minutes to the gentleman from Oregon (Mr. Blumenauer), one of the main coauthors.

Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Green), who came to us earlier and mentioned a particular problem affecting his State and is responsible, with the support of others from Texas, for a very constructive change in this program.

Mr. Speaker, I did want to enter my Russian grandparents in the ``they got run out'' contest, but I will do that later.

Mr. Speaker, I yield 30 seconds to the gentleman from Oregon (Mr. Blumenauer).

Mr. Speaker, I yield 3 minutes to the gentleman from California (Mr. Thompson).

(Mr. THOMPSON of California asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield myself the remainder of my time.

Mr. Speaker, I want to again express my appreciation to the people working on this, and I should acknowledge, as others have, we do recognize that Louisiana, because of geography and history, has different problems and I am pleased that we were able, and I understand we were not able to get everybody together, but I think it was a good thing that because of the gentleman from Louisiana (Mr. Baker) and the gentleman from Louisiana (Mr. Tauzin), the bill is different than it would have been. They did call to our attention special problems that they have; we cannot always resolve everything. But I appreciate that we were able to move in that spirit.

I also wanted at this point, Mr. Speaker, to say that I know the gentlewoman from California who has been working on this from my subcommittee as well as others has some concerns, and I yield to the gentlewoman from California (Ms. Waters).

Mr. Speaker, reclaiming my time, I thank the gentlewoman. Let me say, first of all, she talked about encouraging thinking outside the traditional. For me she has picked a good week in which to do this. I have been spending a lot of time talking about some nontraditional thinking this week in my State Supreme Court on Tuesday. But in the particular issue that she mentioned, that she has alerted us to it, she is absolutely right. The people in her district were hit by some natural disaster that no one could have predicted. We need to have a capacity to help communities respond to the unpredictable as well as the predictable. And I would assure her that it is my intention, now that she has brought this to our attention, to see that the committee addresses that to the extent that we can next year.

I also just want to say in closing, Mr. Speaker, that I am very pleased that we are where we are, but I should reiterate, we are at a point where we are, I believe, going to agree to a 3-month extension of this program. I hope no one thinks that simply by inaction, they are going to be able to coerce us, and I do not mean anybody in this room or who votes in this room; I just do not want anyone to think that inaction will force us to continue to do

year-by-year extensions that the chairman had talked about. We made a serious, good-faith compromise here. I believe it ought to be generally acceptable. I hope that early next year, when Congress reconvenes after our recess, we will be able to come forward with this bill with maybe some minor changes and get some further study, and it will become law. I hope that everyone understands that this is our chance to put this on the kind of indefinite footing it ought to be on.

Mr. Speaker, will the gentleman yield?

Mr. Speaker, the first group the gentleman read, the Heritage Foundation and that group, would you send them a note reminding them where I was on this bill, that I helped on this bill?

Mr. Speaker, I yield myself such time as I may consume.

(Mr. BLUMENAUER asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I appreciate very much the comments that the gentleman from Wisconsin made and particularly highlighting the long-standing contribution of our friend, the gentleman from Nebraska (Mr. Bereuter) who I have been privileged to work with the last 6 years on this bill, but I know he has been working on this issue and is a recognized congressional expert, one of the gentleman's many areas of expertise.

I think it is also important to note the cooperation with the gentleman from Ohio (Chairman Oxley), the gentleman from Massachusetts (Ranking Member Frank) who worked with us as we were maneuvering with our friends in the Senate. I think this is a better bill for the effort.

We have also had a great deal of back and forth from other Members who are from States that have suffered from repetitive-flood loss; and as a result of their efforts, and the work in the Senate, I think we actually have a bill that provides better and broader protections than when we had first begun this work.

Last but not least, I note on the floor the presence of Kyle Gilster, who has done outstanding work staffing this on behalf of the gentleman from Nebraska (Mr. Bereuter). I note that we also have Janine Benners who has been doing this in my office.

Mr. Speaker, I would insert at this point in the Record the remainder of my comments.

Thank you to Mr. Frank, Senator Bunning, Senator Shelby, and Senator Sarbanes.

I also want to thank the staff of Representative Bereuter, Kyle Gilster, and Representative Frank, Jeff Riley, for their work on this issue.

The National Flood Insurance Program (NFIP) is crucial and good example of working with local communities to reduce impact of disasters. Benefits economy, environment, and individual property values.

NFIP started in 1968--private insurance companies suffered high losses and stopped offering coverage for flood damage. NFIP helps homeowners deal with flood losses and gives communities tools to prevent future flood damage. Program has already lowered flood damage by 25 percent below the level that would have occurred without the program.

Some problems with the program: in some cases, federal flood control policy encourages floodplain development by financing the construction and repair of levees and underwriting the risk of flooding.

FEMA was concerned about this problem during the Clinton and Bush administrations. Mr. Bereuter and I worked with former FEMA Administrator James Lee Witt to develop our proposal to fix NFIP problems.

The Office of Management and Budget has pointed out that in too many years the program has expenses greater than its revenue from insurance premiums which prevents building long-term reserves to handle the costs of flood insurance.

Twenty-five percent of the policyholders pay substantially subsidized premiums, with the Federal Treasury and other policyholders paying the difference.

Losers of the NFIP are people who live in areas that require flood insurance, even though they do not have their property flood often, pay dramatically high rates.

The program is currently self supporting from premium income. However, in the 1980s federal taxpayers had to make up a shortfall of $1.2 billion when the income from the low premiums was not enough to cover the flood claims. The chances of this happening again are high.

Repetitively flooded properties are a significant strain on the NFIP.

FEMA reports that just 1 percent of the properties account for 25 percent of NFIP flood loss dollars. Many of these properties have received more in flood insurance claims payments than the building's value.

Subsidizing people to live in repetitively flooded areas does not make sense.

It is bad for the federal taxpayer, bad for the environment, and bad for the families that are continually placed in harm's way.

Property owners are trapped in a dangerous and expensive cycle. We do flood victims no favors by rebuilding their homes in harm's way.

The legislation we are considering today will avoid many of the injuries, deaths, and damages before they occur, and give property owners the option of moving to a less hazardous area.

Our approach helps build disaster resistant communities and safe homes by providing mitigation assistance to communities.

This bill has a number of benefits:

Most importantly, it will move people out of harm's way and discourage newcomers from moving there. This bill will save lives by moving people to higher ground.

Often overlooked, it will save the federal government millions of dollars in avoided flood damages. FEMA reports that mitigation and building standards already in place have resulted in over $1 billion annually in reduced flood losses. Our bill will significantly increase these savings by increasing funding for mitigation.

Savings to ratepayers in the National Flood Insurance Program. Mitigating repetitively flooded properties will reduce the pressure to raise flood insurance rates. The Association of State Floodplain Managers estimates that avoiding just one 10 percent rate increase could save the 4.4 million policyholders $175 million each year.

Finally, this bill will significantly benefit the environment. If property-owners choose to relocate, the land will convert to open- space. Non-structural approaches to flood control, such as voluntary buyouts and restoration of natural floodplains, are often much more effective in controlling floods than structural approaches. Natural floodplains also prevent pollution problems from flooding.

As the bill went through the process in the House and Senate, we worked with Members from coastal areas to make the reforms more sensitive to the plight of their constituents.

I would like to highlight one change we were able to make in the Increased Cost of Compliance (ICC) program. The bill not specifically provides for use of the ICC program funds as local match monies. This program, created in the 1994 Flood Insurance Reform Act, uses a flood insurance premium surcharge to raise money for mitigation--but it hasn't yet functioned well.

Freeing up these funds for use in mitigation of repetitive loss properties will help the affected property owners by dramatically reducing costs to them and will help all policy holders by stemming the drain on the Flood Insurance Fund from repetitive claims.

I respectfully urge passage of the Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 204. This is one of the best fiscal and environmental opportunities for Congress this year.

We can't stop natural hazards from threatening our communities, but we can try to minimize or stop them from becoming disasters, and that's what this bill does.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I first want to thank the distinguished gentlemen from Ohio (Mr. Oxley) and (Mr. Ney) the chairman and subcommittee chairman, and the distinguished gentleman from Massachusetts (Mr. Frank) for his tenaciousness and support for quite a number of years on this issue. I think I have been working on it approximately 14 or 16 years now, first with Congressman Joe Kennedy of Massachusetts, but in recent years with the help of the gentleman from Oregon (Mr. Blumenauer), who has been a partner in this effort and a tireless advocate of reform of the NFIP.

I want to say that the bill is better coming through committee because of the work of the gentleman from Louisiana (Mr. Baker). He constantly brought issues to me and particular circumstances in his constituency and individually or collectively we worked out solutions which made the bill better. And he has helped today here in the process of addressing a couple of other concerns that I think are helping to make the bill better.

This bill will give FEMA the needed tools to reduce the number of repetitive loss properties which cost the NFIP about $200 million annually. These properties, while comprising approximately 1 percent of the currently insured properties, are expected to account for 25 to 30 percent of the claims paid. The vast majority of repetitive loss properties are receiving flood insurance premiums at a cost that are below their actuarial risk.

As far as the contents, this legislation authorizes two programs which address repetitive loss properties. First, it authorizes a new pilot program. Second, the bill uses FEMA's existing flood management assistance to provide assistance to repetitive claims properties. At the outset, I think it is important to note that no property owner under this bill is ever denied Federal flood insurance except for fraudulent claims.

This Member will give a brief description of these two programs. The pilot program authorizes up to $40 million a year to be transferred from the National Flood Insurance Fund over 5 years for mitigation assistance to severe repetitive loss properties. The pilot program which expires on September 30, 2008, under this legislation addresses these properties in a simple, straightforward manner. The owners of a severe repetitive loss property will be charged something closer to the actuarial, risk-based rates for a progressive period on their national flood insurance policy. That is a change we made just today in response to concerns brought to us.

The first condition is that there has to be a severe repetitive loss property. The second condition is that the owner of the property must have refused a mitigation measure from a State or locality such as an elevation of the structure or buyout of the property. Furthermore, this bill would allow the director of FEMA to reduce the non-Federal cost share under the pilot program from the current 25 percent to as low as 10 percent in any State that has 5 percent or more of the total number of severe loss properties in the U.S.

In 2002, for example, this benefit would be qualified for Louisiana, Texas, New Jersey, Florida, North Carolina, New York. So in other words, the non-Federal share is reduced from 25 percent to as low as 10 percent because these States have a number of these repetitive-loss properties.

So we are trying this new step to accommodate those particular costs. This legislation also allows any owner of a severe repetitive-loss property to appeal and increase to anything approaching an actuarial rate of insurance to an independent third party, and one of the grounds for appeal is that the owner of the property will not be able to purchase a replacement primary residence of comparable value that is functionally equivalent to their current residence.

I think it is important to note the broad coalition of groups which are supportive of the legislation: the Heritage Foundation, the National Taxpayers Union, Citizens Against Government Waste, Taxpayers for Common Sense, the National Association of Realtors, America's Community Bankers, The National Association of Professional Insurance Agents, the Independent Insurance Agents and Brokers of America, the Mortgage Bankers Association, the American Bankers Association, the Association of State Floodplain Managers, the American Planning Association, the National Wildlife Federation, Friends of the Earth, the U.S. Public Interest Research Group,

American Rivers, The Ocean Conservancy, and the Coast Alliance. And that is a pretty broad coalition.

I want to bring three other things to the attention of the body. First of all, a provision in this bill was deleted which would otherwise have unintentionally provided no Federal disaster assistance to be given to severe and repetitive-loss properties or repetitive- claims properties if the owner refused to accept mitigation. This change was done in our legislation upon the very constructive suggestion of the distinguished gentleman from Louisiana (Mr. Tauzin).

Lastly, a provision was included in H.R. 253 which was offered by the gentleman from Texas (Mr. Green). His provision addresses the issue of the amount of the buyout offer. Under this bill, the buyout offered by the States or locality would be the highest of three differential rates. And, finally, third, we have changed the title to more accurately reflect the reality that in the process of compromise, only one of these two programs has anything to do with two floods.

I thank the gentleman for yielding me this time.

This bill was introduced by this Member on January 8, 2003. It both authorizes the NFIP through September 30, 2008, and makes essential changes to the program as it relates to the mitigation of repetitive loss properties. The NFIP is set to expire on December 31, 2003. This legislation passed the House Financial Services Committee, as amended, without noted dissent by a bipartisan voice vote on July 23, 2003.

This Member believes that it is important that one final public policy point be made. Under the NFIP, a very large regional cross- shifting of the cost of flood insurance is occurring; the policyholders in nonrepetitive loss areas of the country by their higher than appropriate premiums are subsidizing the policyholders in repetitive loss areas of the country. This bill will give FEMA the needed tools to substantially reduce the dramatic cases of this cost-shifting to other NFIP policyholders.

Mr. Speaker, in closing, we need to stop the very expensive treading through the water of repetitive loss after repetitive loss. Passing this legislation is the right thing to do at the right time. This Member urges his colleagues to support H.R. 253.

Mr. Speaker, I appreciate the gentleman's courtesy in permitting me to speak on this, and I appreciate the leadership that has been shown by the committee, the gentleman from Ohio (Mr. Oxley), the gentleman from Massachusetts (Mr. Frank), the principal lead sponsor the gentleman from Nebraska (Mr. Bereuter) who has been working on this for a number of years.

I am afraid the gentleman from Louisiana (Mr. Tauzin) fundamentally misses the point for why we have a flood insurance program. I find no small amount of irony that it was the late Hale Boggs who was one of the first three sponsors of the flood insurance program in 1968 precisely because the people in Louisiana needed a program like this. I have encouraged my friends from Louisiana who were skeptical to maybe look at the facts. It is the people in Louisiana who are actually paying more money, and I wish the

gentleman from Louisiana was still here so that we could engage in a little bit of a colloquy at some point, but they have paid more than $200 million in premiums above what they have gotten back. There are a few of the Cajuns who are part of the 10,000 people who are flooded repeatedly, in many cases being paid more than the price of the property value. This bill would help these people. We have in our files correspondence from people who are trapped because of the repetitive flood loss. They cannot sell their property.

This bill, contrary to what my friend from Louisiana says, would not force anybody to sell their property. It would, for the first time, provide adequate mitigation on an ongoing basis so that they would have a choice. They could floodproof the property, raise it if it is cost- effective or they could relocate. Thanks to the gentleman from Texas (Mr. Green), there is extra provision to make sure that some of these low-income properties are dealt with. One of the problems is that under this program, other people in Louisiana would be paying much higher rates over time to pay for a few repetitive flood loss properties.

Mr. Speaker, I think this bill is coming at exactly the right time. We are going to be able to take care of the 1 percent of the property that is costing thousands of policyholders in Louisiana more than they are putting in, and if we would take the approach of my friend from Louisiana, unfortunately, they would be paying even more in premium while other people are trapped in this repetitive flood loss cycle. This bill signals a higher profile and greater interest in a commonsense solution.

One of the reasons the business community is so interested in it is because it will help make sure that the properties here can be financed. It will make sure that we cut down the long-term burden for 4.5 million policyholders across the country who are paying year after year more money. It is not just the people in Louisiana that are being disadvantaged, but millions of policyholders around the country who are paying higher premiums than are necessary. If we are able under this program to defer just one 10 percent premium increase, it will mean a savings for policyholders across the country of $165 million each and every year on into the future. And there are tax dollars involved here, because there are countless times where the Federal Government steps in with disaster relief. With this program and its mitigation, we will be spending fewer of these tax dollars.

Mr. Speaker, this is sound environmentally, it is sound in terms of economic development, it is sound in terms of helping these people in harm's way, and it sends the right pricing signals. It does not force them out of their home but it says if you are going to stay there, you are going to start paying a little bit more so that the rest of the people in Louisiana and Mississippi and Missouri and Oregon, God forbid, do not have to pay a disproportionate amount unnecessarily. But part of the advantage of this bill cannot have a price put on it. It is going to save lives.

Looking in today's paper, there were three people killed yesterday in Maryland. I do not know what the loss is in Louisiana or Mississippi or Oregon. We have seen them time and time again. This is a proposal that is going to help get these people out of being trapped and I think not just save money but it is going to stop the disruption of business and it is going to save lives. It is right for the environment, it is right for the economy, it is right for the Federal taxpayers and it is right even for my colleague's Cajun friends who are going to end up being out of this flooding cycle and more people in Louisiana are going to save in premium dollars.

Mr. Speaker, I just wanted to comment briefly because it is hard to get through things very quickly, but one of the things that was in my notes that I wanted to acknowledge was that this bill is a very different bill because of the contribution the gentleman from Louisiana (Mr. Baker) made. I personally learned a lot about the flood insurance program in a broader context in terms of some of the history, in terms of some of the dynamics and some of the perceptions that we need to build. My good friend from Nebraska mentioned the name change. It is not just symbolic. I think it is something that really reflects a better approach, and it would not have happened without the gentleman from Louisiana (Mr. Baker), and I appreciate it.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 253) to amend the National Flood Insurance Act of 1968 to reduce losses to properties for which repetitive flood claim payments have been made, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and insert extraneous material on this legislation.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, today I rise in support of H.R. 253, a reauthorization of the National Flood Insurance Program. I am pleased that an arrangement this afternoon could be worked out between all of the interested parties so this bill could come up under suspension. We can all agree that this is a fiscally responsible bipartisan piece of legislation.

Floods have been and continue to be one of the most destructive and costly natural hazards to our country. The National Flood Insurance Program is a valuable tool in addressing the losses incurred throughout this country due to floods. It ensures that businesses and families have access to affordable flood insurance that would not be available on the national market. The National Flood Insurance Program was established in 1968 with the passage of the National Flood Insurance Act.

Prior to that time, insurance companies generally did not offer coverage for flood disasters because of the high risk involved. Today almost 20,000 communities participate in the National Flood Insurance Program. More than 90 insurance companies sell and service flood policies. There are approximately 4.4 million policies covering a total of $620 billion. In order to participate in the program, communities must agree to abide by certain hazard mitigation provisions. These provisions include adopting building codes that require new floodplain structures to be protected against flooding, or elevated above the 100- year flood plain. The National Flood Insurance Program is administered by FEMA. It is worth noting that on November 25, 2002, President Bush signed into law the Homeland Security Act of 2002 which brought FEMA under the new Department of Homeland Security.

The NFIP authorization expired on November 21, 2002. Unfortunately, Congress adjourned without extending the program. This situation was quickly remedied in the 108th Congress on January 13, 2003. President Bush signed into law a bill to reauthorize the program for 1 year retroactively to January 1, 2003. This 1-year reauthorization will give us the time necessary to determine how best to go about reforming the existing program.

This is a good day for the National Food Insurance Program and a good day for American taxpayers. I applaud all Members for reaching agreement and give credit to the gentleman from Ohio (Mr. Oxley), the gentleman from Louisiana (Mr. Baker), the gentleman from Nebraska (Mr. Bereuter), the gentleman from Massachusetts (Mr. Frank), the gentleman from Louisiana (Mr. Tauzin), the gentlewoman from California (Ms. Waters), and the gentleman from Oregon (Mr. Blumenauer).

Also, I want to note that a correction was made that was a terrible situation for many people in that if they moved a trailer off a property, they could not take it back in; and they were forced to build expensive, tall walls and it hurt a lot of poor people. That correction was made after 5 years of injustice on that. I urge my colleagues to support this initiative.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield such time as he may consume to the gentleman from Ohio (Mr. Oxley).

(Mr. OXLEY asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield 3 minutes to the gentleman from Louisiana (Mr. Tauzin).

Mr. Speaker, in a calmer, non-Cajun moment, I yield 5 minutes to the gentleman from Nebraska (Mr. Bereuter).

(Mr. BEREUTER asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield 3 minutes to the gentleman from Louisiana (Mr. Baker).

Mr. Speaker, I yield 1 minute to the gentleman from Maryland (Mr. Gilchrest).

Mr. Speaker, I yield 1 minute to the gentleman from Florida (Mr. Foley).

Mr. Speaker, I yield myself the remaining time.

In closing, I want to thank everybody involved with this bill. I want to mention the supporters of H.R. 253 include National Taxpayers Union, Citizens Against Government Waste, Heritage Foundation, Taxpayers for Common Sense, American Bankers Association, National Association of Realtors, America's Community Bankers, Mortgage Bankers Association, National Association of Homebuilders, National Association of Professional Insurance Agents, Independent Insurance Agents and Brokers of America, American Planning Association, the Association of State Floodplain Managers.

I yield to the gentleman from Massachusetts.

Mr. Speaker, I will do that, and then I will make a phone call too, and if the gentleman wants, we will bring them to his office for a chat.