[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




      CONTROLLING THE RISING COST OF FEDERAL RESPONSES TO DISASTER

=======================================================================

                                (114-40)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
    ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 12, 2016

                               __________

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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee,      ELEANOR HOLMES NORTON, District of 
  Vice Chair                             Columbia
JOHN L. MICA, Florida                JERROLD NADLER, New York
FRANK A. LoBIONDO, New Jersey        CORRINE BROWN, Florida
SAM GRAVES, Missouri                 EDDIE BERNICE JOHNSON, Texas
CANDICE S. MILLER, Michigan          ELIJAH E. CUMMINGS, Maryland
DUNCAN HUNTER, California            RICK LARSEN, Washington
ERIC A. ``RICK'' CRAWFORD, Arkansas  MICHAEL E. CAPUANO, Massachusetts
LOU BARLETTA, Pennsylvania           GRACE F. NAPOLITANO, California
BLAKE FARENTHOLD, Texas              DANIEL LIPINSKI, Illinois
BOB GIBBS, Ohio                      STEVE COHEN, Tennessee
RICHARD L. HANNA, New York           ALBIO SIRES, New Jersey
DANIEL WEBSTER, Florida              DONNA F. EDWARDS, Maryland
JEFF DENHAM, California              JOHN GARAMENDI, California
REID J. RIBBLE, Wisconsin            ANDRE CARSON, Indiana
THOMAS MASSIE, Kentucky              JANICE HAHN, California
MARK MEADOWS, North Carolina         RICHARD M. NOLAN, Minnesota
SCOTT PERRY, Pennsylvania            ANN KIRKPATRICK, Arizona
RODNEY DAVIS, Illinois               DINA TITUS, Nevada
MARK SANFORD, South Carolina         SEAN PATRICK MALONEY, New York
ROB WOODALL, Georgia                 ELIZABETH H. ESTY, Connecticut
TODD ROKITA, Indiana                 LOIS FRANKEL, Florida
JOHN KATKO, New York                 CHERI BUSTOS, Illinois
BRIAN BABIN, Texas                   JARED HUFFMAN, California
CRESENT HARDY, Nevada                JULIA BROWNLEY, California
RYAN A. COSTELLO, Pennsylvania
GARRET GRAVES, Louisiana
MIMI WALTERS, California
BARBARA COMSTOCK, Virginia
CARLOS CURBELO, Florida
DAVID ROUZER, North Carolina
LEE M. ZELDIN, New York
MIKE BOST, Illinois
                                ------                                

 Subcommittee on Economic Development, Public Buildings, and Emergency 
                               Management

                  LOU BARLETTA, Pennsylvania, Chairman
                  
ERIC A. ``RICK'' CRAWFORD, Arkansas        ANDRE CARSON, Indiana
THOMAS MASSIE, Kentucky                    ELEANOR HOLMES NORTON, District of 
MARK MEADOWS, North Carolina                   Columbia
SCOTT PERRY, Pennsylvania                  ALBIO SIRES, New Jersey
RYAN A. COSTELLO, Pennsylvania             DONNA F. EDWARDS, Maryland
BARBARA COMSTOCK, Virginia                 DINA TITUS, Nevada
CARLOS CURBELO, Florida                    PETER A. DeFAZIO, Oregon (Ex Officio)
DAVID ROUZER, North Carolina               VACANCY
BILL SHUSTER, Pennsylvania (Ex Officio)          
    
    
    
                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    iv

                               TESTIMONY
                                Panel 1

Hon. Carlos Curbelo, a Representative in Congress from the State 
  of Florida.....................................................     8

                                Panel 2

Hon. Joseph L. Nimmich, Deputy Administrator, Federal Emergency 
  Management Agency..............................................    10
Hon. Sallie Clark, Commissioner, El Paso County, Colorado, on 
  behalf of the National Association of Counties.................    10
Bryan Koon, Director, Florida Division of Emergency Management, 
  on behalf of the National Emergency Management Association.....    10
Eric Nelson, Senior Vice President of Catastrophe Risk 
  Management, Travelers Insurance, on behalf of the BuildStrong 
  Coalition......................................................    10
Kevin Mickey, GISP, CTT, Chair, Multihazard Mitigation Council, 
  National Institute of Building Sciences, and Director of 
  Professional Development and Geospatial Education, The Polis 
  Center, Indiana University Purdue University Indianapolis......    10

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Hon. Andre Carson of Indiana.....................................    37

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Hon. Carlos Curbelo \1\
Hon. Joseph L. Nimmich...........................................    41
Hon. Sallie Clark................................................    47
Bryan Koon.......................................................    57
Eric Nelson......................................................    65
Kevin Mickey, GISP, CTT..........................................    73

                       SUBMISSIONS FOR THE RECORD

Slides referenced in the opening remarks of Hon. Lou Barletta, a Representative
    in Congress from the State of Pennsylvania.....2, 3, 4, 5, 6 



                        ADDITIONS TO THE RECORD

Press release of May 10, 2016, ``Curbelo and Sires Introduce 
  Disaster Mitigation Bill''.....................................    88
H.R. __, a bill to improve disaster mitigation programs, and for 
  other purposes.................................................    89
Letter of May 12, 2016, from Mary Ellen Sprenkel, President and 
  CEO, Corps Network, to Hon. Lou Barletta, Chairman, and Hon. 
  Andre Carson, Ranking Member, Subcommittee on Economic 
  Development, Public Buildings, and Emergency Management........   106

----------
\1\ Hon. Carlos Curbelo did not submit a prepared statement for the 
record.


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    CONTROLLING THE RISING COST OF FEDERAL RESPONSES TO DISASTER

                              ----------                              


                         THURSDAY, MAY 12, 2016

                  House of Representatives,
              Subcommittee on Economic Development,
        Public Buildings, and Emergency Management,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:10 a.m. in 
room 2167, Rayburn House Office Building, Hon. Lou Barletta 
(Chairman of the subcommittee) presiding.
    Mr. Barletta. The subcommittee will come to order. At our 
first hearing in the 114th Congress, I stated that my top 
emergency management priority was pursuing life-saving and 
cost-reducing disaster legislation and launching a public 
policy debate about the costs of disasters, in the terms of 
both the loss of property and human life.
    We followed that hearing with several roundtables to help 
us understand what disasters cost this country, who pays those 
costs, and whether the problem is getting better or worse. 
Early last year, Ranking Member Carson and I introduced the 
FEMA Disaster Assistance Reform Act to call for the first 
comprehensive assessment of disaster costs and losses in over 
20 years. We also wanted to reform several disaster assistance 
programs to make them more efficient and more effective. In 
February the House passed this FEMA [Federal Emergency 
Management Agency] legislation and we hope the Senate will take 
up H.R. 1471 and pass it soon.
    The purpose of today's hearing is to discuss what we have 
learned so far and begin exploring potential solutions, 
particularly the principles that should be driving those 
solutions. While there are significant variations from year to 
year, we have found that disaster losses have grown 
considerably over the past three decades. As a result, the 
private sector and Government are spending an ever increasing 
amount of money on disasters. FEMA alone has obligated more 
than $178 billion since 1989 for over 1,300 Presidential 
disaster declarations.
    In addition, the number of Federal disasters is going up.
    Take a look at this graph that shows the steady increase in 
the number of Presidential disaster declarations since 1953.

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    Mr. Barletta. Many have suggested, including the Government 
Accountability Office, that the growth in the number of 
disaster declarations may be causing the increase in Federal 
disaster costs. But when we had the Congressional Research 
Service look more closely at the data, they found the growth in 
declaration is driven by small disasters and they represent a 
very small part of Federal disaster spending.

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    Mr. Barletta. In fact, 75 percent of all declared disasters 
account for only 7 percent of costs. In other words, we could 
eliminate three-quarters of all federally declared disasters 
and barely cut 7 percent of Federal disaster spending. I would 
argue the amount saved by eliminating those disaster 
declarations certainly would not outweigh the benefit those 
declarations provide to helping our smaller, remote communities 
respond to and recover from disasters.
    In order to understand why disaster costs are going up, we 
need to look at the big disasters, since that is where over 90 
percent of the money goes. Since we started looking into this 
issue, we have also found the role of the Federal Government in 
covering disaster losses has increased.
    As we can see here, Federal disaster spending as a share of 
total disaster losses has grown from 23 percent during 
Hurricane Hugo in 1989 to 80 percent during Hurricane Sandy in 
2012.

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    Mr. Barletta. In recent years, significant disaster aid has 
been provided outside of FEMA's disaster assistance programs.
    The charts show how disaster aid programs outside FEMA have 
grown. In fact, for Hurricane Sandy, there was less FEMA 
assistance than from either the Department of Housing and Urban 
Development or the Department of Transportation. We found that 
these additional disaster aid programs don't have the same 
requirements and restrictions as the FEMA assistance.

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    Mr. Barletta. FEMA assistance is tied to actual disaster 
damage, and is for individuals, governmental entities or 
certain nonprofits performing government-like functions. FEMA 
only spends money on eligible items for eligible applicants, no 
matter how much money FEMA receives. FEMA mitigation funds must 
be used on cost-beneficial projects to ensure the Federal 
investment is a wise one. FEMA makes every effort to get money 
into the hands of applicants as fast as possible to enable 
rapid recovery from disaster impacts.
    In the most recent data provided by the Sandy Program 
Management Office from March 2016, it appears that these 
agencies have been slow in awarding and especially paying out 
funds.

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    Mr. Barletta. Based on this data, only one-third of the 
CDBG-DR [Community Development Block Grant Disaster Recovery] 
funds have been dispersed and only 13 percent of the FTA 
[Federal Transit Administration] funds have been paid out. Now, 
this may be worth looking into in greater detail, and it 
certainly shows why a comprehensive look into disaster 
spending, as well as costs and losses, is needed. In an era of 
growing Government debt, we need to ensure Federal spending is 
necessary and cost-effective.
    Right after I became a Member of Congress in 2011, my own 
district was hit hard by Hurricane Irene and Tropical Storm 
Lee. I remember in Bloomsburg a family stayed in their home to 
try to move their possessions to an upper floor. But Fishing 
Creek rose too quickly. The house next to theirs was knocked 
from its foundation. Water started gushing through their front 
windows as they called for help. They had to be saved by a 
helicopter. The woman there told me she can never live in that 
home again.
    I will never forget that preparing for natural disasters is 
about more than the loss of possessions; it's our friends' and 
neighbors' lives that could be at stake if we do not plan in 
advance. As we were rebuilding, I was amazed that much of the 
Federal assistance was to rebuild in the same place in the same 
way, leaving people vulnerable to the next storm.
    The Federal Government has a responsibility to respond 
after a disaster, but we also have a duty to be good stewards 
of the taxpayer dollar. I look forward to the conversations we 
will have today, the ideas we are going to hear about, and 
taking the next steps to reduce the costs of disasters, and I 
thank you all for being here.
    I ask unanimous consent that Members not on this 
subcommittee be permitted to sit with the subcommittee at 
today's hearing, offer testimony, and ask questions.
    And with that, I now call on the ranking member of the 
subcommittee, Mr. Carson, for a brief opening statement.
    Mr. Carson. Thank you, Chairman. Great words. Good morning, 
everyone, and welcome to today's hearing. While we have several 
prominent witnesses today, I would especially like to welcome a 
fellow Hoosier, Mr. Kevin Mickey, from the great Hoosier State. 
Mr. Mickey is the director of The Polis Center at Indiana 
University Purdue University Indianapolis. He is also the new 
chair of the Multihazard Mitigation Council at the National 
Institute of Building Sciences.
    I look forward to my colleagues learning about the work 
being done in the great Hoosier State, particularly 
Indianapolis, to address rising disaster costs and losses, plus 
the latest report from the Multihazard Mitigation Council.
    Mr. Mickey's national leadership and his local work are 
terrific examples of what Indianapolis is doing in the field of 
emergency management.
    I yield back, Mr. Chairman.
    Mr. Barletta. Thank you, Ranking Member Carson. We will 
have two panels of witnesses today. On our first panel we have 
our fellow subcommittee member, Carlos Curbelo from Florida. As 
someone from south Florida, Representative Curbelo knows all 
too well the risks posed by natural hazards, the rising cost of 
disasters, and the efforts that have proven successful in 
Florida to incentivize mitigation measures and smart behaviors. 
Congressman Curbelo has been a leader in this area and a great 
advocate for his constituents in south Florida.
    On our second panel we will be joined by the Honorable 
Joseph Nimmich, the Deputy Administrator of the Federal 
Emergency Management Agency, or FEMA, who has been working on 
ways to reduce the cost of disasters and build resilience in 
communities to avoid disaster losses.
    Ms. Sallie Clark, commissioner of El Paso County, Colorado; 
she is here in her capacity as president of the National 
Association of Counties.
    Mr. Bryan Koon, director of the Florida Division of 
Emergency Management, and the president of the National 
Emergency Management Association; he is here to talk with us 
about his experience, as well as help us see things from a 
State perspective.
    Mr. Eric Nelson, senior vice president, catastrophe risk 
management for the Travelers Companies, Inc., representing the 
BuildStrong Coalition.
    Mr. Kevin Mickey, chair of the Multihazard Mitigation 
Council of the National Institute of Building Sciences.
    I ask unanimous consent that our witnesses' full statements 
be included in the record.
    [No response.]
    Mr. Barletta. Without objection, so ordered. We had hoped 
that Chief David Paulison, the former Administrator of FEMA, 
would be able to join us, but he had other commitments. I do 
have a written statement for the record from Administrator 
Paulison. I thank him and the BuildStrong Coalition for their 
input on these important topics, and I ask unanimous consent 
that this statement be included for the record.
    [No response.]
    Mr. Barletta. Without objection, so ordered.
    For our witnesses here, since your written testimony has 
been made a part of the record, the subcommittee would request 
that you limit your oral testimony to 5 minutes.
    Congressman Curbelo, you may proceed.

TESTIMONY OF HON. CARLOS CURBELO, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF FLORIDA

    Mr. Curbelo. Chairman Barletta, Ranking Member Carson, 
members of the committee, thank you for the opportunity to 
testify before you today. This is my first time testifying 
before Congress, and I am glad to do it here, at the Committee 
on Transportation and Infrastructure's Subcommittee on Economic 
Development, Public Buildings, and Emergency Management, 
especially to discuss the important topic of disaster 
mitigation. I am honored to serve with all of you.
    I would like to take the opportunity to share some thoughts 
on controlling the rising costs of the Federal Government when 
responding to disasters. I am a native of south Florida. And my 
good friend, Mr. Sires, who is working with me on this issue, 
is from New Jersey. We both have a deep and personal 
understanding of the devastating impacts of natural disasters 
on families and communities, and have seen firsthand what 
happens when homes, schools, and businesses aren't built to 
withstand the forces of nature. My family and I lived through 
Hurricane Andrew back in 1992. Fortunately, in my part of town, 
the damage was not extreme. But just a few miles south, where 
some of my family members lived, the devastation was 
horrifying.
    Being a Floridian, I know that we have pretty strong State 
building codes already on the books. But at the national level 
it is time to fix the broken Federal system that is riddled 
with red tape, waste, fraud, and abuse. There is some great 
work already being done in the field of pre-disaster 
mitigation, and I would like to thank Chairman Barletta for 
being a strong leader on the issue.
    Over the last 30 years we have seen a significant increase 
in federally declared natural disasters. But instead of taking 
additional steps to focus more on preparing for these disasters 
with enhanced building codes to make communities safer, the 
Federal Government typically waits until after a disaster 
occurs to react. This is incredibly dangerous and costly, 
especially with the increase in extreme weather events.
    According to the Weather Channel, this hurricane season is 
supposed to be the most active since 2012. So this hearing and 
these issues are of the utmost importance, and very timely. For 
these reasons, my friend, Mr. Sires, who knows firsthand in New 
Jersey just how costly cleanup is after a disaster, has 
introduced legislation to work towards promoting stronger 
building codes at the national level by introducing H.R. 5177, 
the National Mitigation Investment Act of 2016.
    This legislation works to alleviate losses to resident and 
commercial property following a natural disaster through 
preventative measures. It would provide incentives for the 
adoption and achievement in enforcing State building codes. We 
do this by allowing the President to increase mitigation 
assistance following a natural disaster by 4 percent, based off 
of the price of cleanup, but only if the State is enforcing 
building codes. This incentive can encourage States and 
localities to be proactive in future building, and also save a 
lot of funds in the long run.
    The bill would also create a pilot program to award grants 
to State and local governments to encourage the adoption and 
enforcement of nationally recognized building codes. The goals 
of the grant program are to reduce disaster response and 
recovery costs by increasing resilience of buildings and 
reducing the amount of damage that occurs due to disaster and 
chronic flooding. Grant awardees will be required to accomplish 
these goals with non-Federal matching funds no less than 25 
percent, and FEMA will be required to provide reports back to 
Congress on the success of the program.
    Mr. Chairman, the residents of both Florida and New Jersey 
have had to rebuild communities after the devastating effects 
of catastrophic natural disasters. Returning to a life of 
normalcy is tremendously difficult, and can take many years. 
Furthermore, chronic tidal flooding poses a significant threat 
to real estate along our waterfront communities, especially in 
my south Florida district and the constituents that Mr. Sires 
represents, as well. This undoubtedly affects insurance rates, 
property values, clean water supplies, and general public 
welfare.
    We believe that, through preemptive methods of 
incentivizing State and local governments to adhere to stronger 
building codes, we will alleviate the burdens and costs of the 
Federal Government after a natural disaster.
    I thank my friend, Mr. Sires, for working with me on this 
legislation. I look forward to hearing from other experts on 
the issue of disaster mitigation in the next panel. This is a 
topic that requires perspectives from diverse geographical 
locations and multiple industries, and I appreciate being able 
to discuss my bill today. Thank you very much, Mr. Chairman.
    Mr. Barletta. Thank you for your testimony, Congressman 
Curbelo. I will now begin the first round of questions, limited 
to 5 minutes for each Member. If there are any additional 
questions following the first round, we will have additional 
rounds of questions, as needed.
    While we usually do not have questions for Members of 
Congress, Mr. Sires is an original cosponsor of Mr. Curbelo's 
legislation, and has a few questions.
    Mr. Sires. I would really thank you, Mr. Chairman. I am not 
going to ask Mr. Curbelo questions, because we have been 
working on this for a while.
    But I do want to thank you. You and I have firsthand 
experience on how devastating some of these catastrophes are, 
how it impacts life, how it impacts community, how it impacts 
the economy. And I really want to thank you for taking a strong 
lead on this. New Jersey got hit hard, Florida has been hit 
hard. And I just want you to know that I think this is the way 
to go, you know. Investing in mitigation, especially on a 
national level, where we can put some real strong codes has 
always been on my mind for many years.
    So I just want to thank you for your hard work, and I look 
forward to continuing, and am proud to work with you on this 
legislation. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Barletta. Thank you. Are there any questions? Mr. 
Costello? No.
    Ranking Member Carson?
    Mr. Carson. No, sir.
    Mr. Barletta. If not, then we thank you very much for your 
testimony. Your comments have been helpful to today's 
discussion.
    We will now call our second panel. I remind you of the 
subcommittee's request to limit your oral testimony to 5 
minutes. And we will give everyone the chance to be seated.
    [Pause.]
    Mr. Barletta. Thank you very much. Deputy Administrator 
Nimmich, you may proceed.

  TESTIMONY OF HON. JOSEPH L. NIMMICH, DEPUTY ADMINISTRATOR, 
    FEDERAL EMERGENCY MANAGEMENT AGENCY; HON. SALLIE CLARK, 
   COMMISSIONER, EL PASO COUNTY, COLORADO, ON BEHALF OF THE 
NATIONAL ASSOCIATION OF COUNTIES; BRYAN KOON, DIRECTOR, FLORIDA 
  DIVISION OF EMERGENCY MANAGEMENT, ON BEHALF OF THE NATIONAL 
  EMERGENCY MANAGEMENT ASSOCIATION; ERIC NELSON, SENIOR VICE 
PRESIDENT OF CATASTROPHE RISK MANAGEMENT, TRAVELERS INSURANCE, 
ON BEHALF OF THE BUILDSTRONG COALITION; AND KEVIN MICKEY, GISP, 
CTT, CHAIR, MULTIHAZARD MITIGATION COUNCIL, NATIONAL INSTITUTE 
OF BUILDING SCIENCES, AND DIRECTOR OF PROFESSIONAL DEVELOPMENT 
AND GEOSPATIAL EDUCATION, THE POLIS CENTER, INDIANA UNIVERSITY 
                 PURDUE UNIVERSITY INDIANAPOLIS

    Mr. Nimmich. Good morning, Chairman Barletta, Ranking 
Member Carson, and the members of the subcommittee. As you 
know, my name is Joe Nimmich. I am the Deputy Administrator for 
the Federal Emergency Management Agency. Thank you for this 
opportunity to testify about the efforts FEMA is undertaking to 
reduce the rising cost of disasters.
    With the continued trend towards urbanization, particularly 
in large cities located in high-risk areas, and the increasing 
severity of weather events, the Nation faces the potential for 
ever-increasing costs in responding to and recovering from 
disasters.
    During a disaster response, FEMA's primary goal is to 
support the survivors through effective, efficient operations. 
Though FEMA has procedures in place to control costs during a 
response, one of the most effective ways to reduce disaster 
costs is to invest in community resilience before a disaster 
strikes, thereby reducing the physical and financial and 
particularly the human impacts of the event.
    Preparedness and mitigation investments made before a 
disaster strikes significantly lessen the financial impacts on 
communities, States, and the Nation. One of the most effective 
mitigation tools is establishing stringent building codes and 
standards that ensure the property is built to insurable 
levels. Let me repeat that: Building codes and standards that 
ensure the property is built to insurable levels.
    You will hear multiple times today that for every dollar 
invested in mitigation, a savings of $4 is achieved, due to the 
reduced impacts post-disaster. Mitigation programs reduce costs 
to the American public by an estimated $3.4 billion annually.
    I have to move off my prepared comments to thank this 
committee and the Congress for taking action such as the post-
Sandy legislation, where we were able to move the recovery 
costs forward based on assessments, but add the mitigation 
costs at that time so that the building back is better and 
reduces the future potential.
    FEMA has made significant strides in the last few years, 
bringing the larger emergency management community together 
around a National Preparedness System. This provides 
communities a common approach to managing the risks, and 
provides communities the information, tools, and funding they 
need to make informed, data-driven decisions. This is just one 
step FEMA takes in promoting resilience.
    The National Flood Insurance Program serves as the 
foundation for the national efforts to reduce loss of property 
from floods, the most costly and frequent disaster in the 
United States. The program identifies areas at risk for 
flooding, and makes flood insurance available to participating 
communities. Within the NFIP, the Community Rating System to 
incentivize communities to implement flood plain management 
practices, offering lower NFIP insurance premiums to 
participating communities.
    Additionally, FEMA provides hazard mitigation assistance 
through programs such as Pre-disaster Mitigation, Flood 
Mitigation Assistance, Hazard Mitigation Grant Programs. These 
provide funding to communities to implement hazard mitigation 
measures pre- and post-disasters.
    Programs such as the NFIP and the Community Rating System 
and hazard assistance invest in community resilience before the 
disaster strikes. This year FEMA went a step further, 
developing the disaster deductible concept, which encourages 
States, tribal, and territorial investment in resiliency 
mitigation programs. I strongly believe this program will be 
critical to any effort to reduce future disaster costs in a 
significant way.
    As you have indicated, Congressman Barletta, Congress, the 
GAO [Government Accountability Office], and others have 
indicated that the Federal cost of disasters continues to rise. 
The solution of moving the threshold higher merely distributes 
the cost differently, but does not reduce the cost of potential 
disasters. With the disaster deductible concept, States would 
have to meet a predetermined financial commitment, similar to 
meeting an insurance deductible, as a condition of receiving 
Federal funds to rebuild damaged facilities and infrastructure.
    Additionally, FEMA would provide credits for those States' 
investments in resiliency measures, such as adopting the 
building enhanced codes or funding preparedness and mitigation 
projects. Using these credits, a State's deductible could be 
reduced, thereby ensuring that communities have an incentive 
for investing in resilience.
    During a 60-day comment period, FEMA received 150 
responses. We are currently evaluating those to provide input 
from the advanced notice of proposed rulemaking to develop a 
proposed rulemaking for later this year. While preparedness and 
mitigation efforts can help us to reduce the costs in many 
areas, we must continue to acknowledge that demographic 
patterns are not something we can easily or readily influence, 
but we can take steps to account for these patterns by 
improving building codes, promoting preparedness.
    FEMA strives to invest in our Nation's resilience and 
support disaster survivors, while being good stewards of the 
taxpayers' dollars. We continue to look for innovative ways to 
encourage risk reduction, promote preparedness and mitigation 
planning, and efficiently implement the recovery programs in 
order to reduce both the risks and cost to the American 
taxpayer.
    Thank you for this opportunity today to testify, and I look 
forward to any questions the subcommittee may have.
    Mr. Barletta. Thank you for your testimony, Deputy 
Administrator Nimmich.
    Commissioner Clark, you may proceed.
    Ms. Clark. Thank you, Chairman Barletta, Ranking Member 
Carson, and members of the subcommittee, for the opportunity to 
testify before you today on the cost of disasters. My name is 
Sallie Clark, and I am a county commissioner from El Paso 
County, Colorado, and also serve as the president of National 
Association of Counties, which represents all of America's 
3,069 county governments.
    Although all parts of Government play a role in disasters, 
counties often serve as the first line of defense when a 
disaster strikes, and are responsible to help our communities 
recover in the aftermath. Whether it is our emergency managers 
or sheriffs or 911 call centers, county hospitals, or public 
health departments, or the fact that we own the majority of our 
Nation's infrastructure, like roads, bridges, and airports, 
Federal policy decisions regarding disasters have a major 
impact on counties.
    My county is no stranger to disasters, and the topic of 
this hearing is personal for me. Over the past several years, 
El Paso County and our surrounding areas have been devastated 
by a series of wildfires and flash floods that have upended our 
residents' lives, strained our local economy, and caused enough 
damage to prompt four Presidential disaster declarations over a 
3-year period.
    Our county, which long ago inspired Katharine Lee Bates to 
write the famous hymn, ``America the Beautiful,'' is now home 
to charred, barren hillsides. And the vegetation that once 
protected the area from stormwater runoff has disappeared, 
paving the way for dangerous flash floods.
    But we have been working diligently to help our community 
recover and become more resilient in the future. Today I 
respectfully submit three principles for your consideration, as 
you continue to discuss Federal disaster spending.
    First, Federal disaster spending should be viewed in the 
context of corresponding spending by State and local 
governments and the capacity of each level to fund disaster 
recovery efforts. Thousands of disasters strike our Nation each 
year, and the vast majority of long-term recovery costs are 
carried on the backs of State and local governments.
    According to NACo's [National Association of Counties'] 
analysis of FEMA data, over the last 10 years 92 percent of 
counties across the Nation had at least one FEMA-declared 
disaster. And according to materials published by FEMA, the 
number of disasters successfully handled without request for 
Federal assistance is estimated at 3,500 to 3,700 annually, 
while only about 35 disasters per year received major 
declarations triggering Federal assistance between 1953 and 
2014.
    Furthermore, it is important to consider the respective 
fiscal capacity of Federal, State, and local governments when 
assessing contributions to our Nation's recovery from 
disasters. County governments in more than 40 States operate 
under restrictive revenue constraints imposed by State 
policies, including caps on property taxation that limit 
counties' ability to raise additional funds in the face of 
rising disaster costs. Local governments spend significantly on 
disasters. And changes to Federal disaster spending should not 
be assessed without consideration of this.
    Second, decreases in Federal disaster spending should not 
come at the expense of State and local governments. The 
ultimate result of shifting Federal disaster costs to State and 
local governments will further deplete resources available for 
proactive disaster mitigation and resiliency work, resulting in 
even costlier disasters in the future.
    FEMA's disaster deductible proposal presents some serious 
challenges for local governments. For example, El Paso County 
has spent many millions of dollars on mitigation projects in 
the last several years, as we have worked to recover from the 
wildfires and flash floods that have ravaged our community, 
including loss of life. But under the disaster deductible 
proposal, if the State of Colorado fails to sufficiently invest 
in mitigation efforts, public assistance funds could be 
withheld from our county at times when we are in most need of 
Federal assistance.
    In this way we could be punished because of the inaction of 
an entity over which we have no control, despite our best 
efforts in mitigation. And this is just one of the many issues 
with this proposal that thus far have not been sufficiently 
addressed.
    Because of this, FEMA has not given local governments 
confidence that a disaster deductible could be implemented 
without the significant risk that it would simply shift 
disaster costs from the Federal Government to State and local 
governments.
    And finally, local disaster mitigation efforts bring down 
the overall cost of disasters, and should be supported by the 
Federal Government. Counties are uniquely positioned to 
implement mitigation efforts through our regulatory authorities 
and convening powers. Collaboration with the Federal Government 
helps counties better utilize our authorities and resources to 
mitigate the damage caused by disasters, increasing community 
resiliency, and decreasing impact and cost of future disasters 
for all levels of Government.
    FEMA's Hazard Mitigation Grant Program and the other 
Federal programs enable counties to undertake large mitigation 
projects that may otherwise be out of their reach and have 
tremendous potential to drive down the cost of disasters for 
all levels of Government.
    Mr. Chairman, Ranking Member Carson, and members of the 
subcommittee, I want to thank you again for inviting the local 
perspective on this important conversation. And I would welcome 
any questions.
    Mr. Barletta. Thank you for your testimony, Ms. Clark.
    Mr. Koon, you may proceed.
    Mr. Koon. Thank you, Mr. Chairman, Ranking Member, and 
members of the subcommittee. My name is Bryan Koon, and I am 
the director of the Florida Division of Emergency Management. I 
am here on behalf of the National Emergency Management 
Association, which represents the State emergency management 
directors of the 50 States, territories, and the District of 
Columbia.
    As the frequency, intensity, and variability of disasters 
increase, it is imperative to reduce risk wherever possible. 
This will ensure that our scarce personnel and financial 
resources are focused on life safety, and those aspects of the 
built environment where the risk cannot be reduced.
    NEMA believes the following. Meaningful cost reduction 
should impact all levels of Government and the private sector, 
and not simply shift the cost between stakeholders. The 
Government practice of spending more money on disaster recovery 
than risk reduction must be changed. Hazard mitigation is a 
cost-effective effort with a documented return on investment. 
Mitigation reduces response costs and speeds recovery. 
Integrating mitigation meaningfully into recovery can be the 
catalyst for a communitywide focus on preparedness in the 
future.
    Mitigation and resilience activities by State, local, and 
tribal governments should be recognized and incentivized by the 
Federal Government. In the long term, cost savings will be 
realized at all levels.
    Much of the legal authority and responsibility for risk 
reduction decisions and activities resides at the local level, 
such as adoption and enforcement of building codes, zoning, and 
land use decisions. Local and tribal governments are critical 
partners in creating and sustaining disaster-resilient 
communities, and must be engaged in this conversation.
    All stakeholders must utilize the best available science 
and predictive analysis tools to illustrate data-driven result 
on investment calculations. This can only be done when data is 
made available to all stakeholders, and when calculations are 
not done in a vacuum. We must leverage data to support our risk 
reduction priorities.
    At the urging of Congress, FEMA has undertaken various 
efforts over the last decades to reduce cost and streamline 
operations. Reengineering of the Public Assistance Program is 
an excellent example of FEMA working to improve and maximize 
existing programs. While it is still too early to determine the 
effectiveness of the change, we are pleased with the effort, 
and urge that similar reforms be considered in other Federal 
programs.
    Investment into the Emergency Management Assistance 
Compact, or EMAC, leverages Federal grant dollars that have 
already been invested in State and local emergency management 
programs. We must encourage greater investments, as States work 
with one another to reduce the need for Federal assistance, 
Federal administrative costs, property damage, and, most 
importantly, save lives.
    In January, FEMA proposed a concept to create a State 
deductible for federally declared disasters. While there was no 
consensus opinion among the States, many expressed these common 
beliefs about any new proposal: the concept should drive real 
reduction in costs at all levels, and not merely a shift in 
costs; an appropriate amount of time must be given to ensure 
successful implementation, including internal education for 
FEMA, and training and guidance for States; States must also be 
given adequate time to ensure that any budgeting requirements 
are understood and acted upon by State legislatures; the 
proposal should utilize the opportunity to decrease 
administrative burden and associated costs; and the deductible 
cannot result in delayed assistance to those in need.
    Regardless of what happens with the disaster deductible or 
any other current initiative, real progress will be achieved 
when all critical stakeholders are engaged. I would like to 
wrap up with a few thoughts on where we go next.
    The Federal Government should continue to offer incentive 
programs that allow States to pursue innovative ways to 
strengthen their communities. We recommend FEMA and other 
agencies continually evaluate these programs to better 
understand the things that deter or prevent communities from 
fully leveraging these opportunities.
    NEMA also recommends that a study to determine the true 
cost of disasters be conducted that captures not only those 
direct financial costs borne by FEMA, but also those costs, 
both direct and indirect, that are paid by other Federal 
agencies, State, local, and tribal governments, and the private 
sector.
    Position FEMA as a partner in developing a more resilient 
Nation. FEMA's focus must transcend response and the agency 
must make advancements in all phases of the disaster cycle. 
Mitigation and long-term recovery are societal investments, not 
a cost.
    Many of the functions that FEMA fulfills during a disaster 
could be done in a more cost-effective manner by using 
personnel deployed from tribal, State, or local government 
through EMAC. Invest in the infrastructure necessary to achieve 
this goal.
    In addition to improving currently existing Federal 
programs, FEMA and others should recognize outstanding efforts 
done by State and local entities and encourage their adoption, 
nationwide. While many stakeholders approach the issue of 
increasing disaster costs differently, we all have a common 
goal. As Government officials, private-sector business leaders, 
and community members, we all have a role to play in reducing 
the cost and impact of disasters.
    I appreciate the opportunity to testify before you today 
and stand ready to answer any questions the committee may have.
    Mr. Barletta. Thank you for your testimony, Mr. Koon.
    Mr. Nelson, you may proceed.
    Mr. Nelson. Good morning. Chairman Barletta, Ranking Member 
Carson, and members of the subcommittee, thank you for holding 
this important hearing today to examine solutions to 
controlling the increased costs of natural disasters. My name 
is Eric Nelson, and I am senior vice president of catastrophe 
risk management at Travelers Insurance. I am testifying today 
on behalf of the BuildStrong Coalition, a group of businesses 
and consumer organizations dedicated to reducing human and 
economic losses from natural disasters.
    As one of the largest property casualty companies in the 
U.S., Travelers provides a unique private-sector expertise that 
can add value to the Federal Government's mission to manage its 
own risk and losses from natural disasters.
    I would first like to thank Chairman Barletta and the 
members of the subcommittee for their continued leadership in 
conducting a series of roundtables on this topic beginning in 
January of last year. I begin today by outlining three major 
takeaways from those roundtables. And before I do that--that 
is--the main question we want to ask ourselves is what 
actionable steps can Congress take to mitigate risk, lessen the 
impact of families and communities across America, and reduce 
Federal losses from natural disasters?
    The first takeaway from the roundtables is that, by almost 
every measure, Federal disaster spending is increasing on an 
unsustainable path. Dr. Erwann Michel-Kerjan from Wharton 
showed that Federal cost-share of natural disasters exploded 
over the last 60 years, increasing from roughly 6 percent in 
1955 to 77 percent in 2015.
    The second takeaway from the roundtable is that the States, 
communities, and individuals have little incentive to undertake 
loss prevention measures before a disaster occurs. We are going 
to hear in a minute the Multihazard Mitigation Council 
conducted a study documenting how every dollar spent on 
mitigation saves the Nation approximately $4 in post-disaster 
relief costs. A new study by Wharton indicated that a $1 
increase in the Individual Assistance grant program reduces 
disaster insurance demand by $6. These findings represent 
compelling evidence that the Federal Government is 
inadvertently fostering short-sighted behavior throughout State 
and local governments and with individual homeowners.
    The third point from the roundtable is that eliminating 
disincentives and replacing them with the appropriate 
incentives for mitigation can benefit all parties involved. The 
Federal Government would benefit by lowering its cost share for 
disaster assistance. States would benefit by alleviating the 
budget constraint caused by disasters, and easing their 
dependency on Federal aid. Families would benefit by reducing 
personal disaster costs and protecting loved ones. Communities 
and local economies would benefit by enabling citizens and 
businesses to recover more quickly after an event.
    While the benefits are clear, the question remains: What 
specific actions can Congress take?
    The National Mitigation Investment Strategy is based on the 
latest science and engineering research from world-class 
research institutions, such as the Insurance Institute for 
Business and Home Safety, or IBHS. IBHS and other research 
institutions conduct research on building performance standards 
and simulated disaster conditions and controlled environments. 
Research from these institutions demonstrates that statewide 
adoption and enforcement of building codes can reduce long-term 
risk. Studies conducted in the wake of major disasters also 
support this finding.
    Another fact. According to IBHS, at least 25 percent of all 
businesses that close down for 24 hours or more during a 
disaster never reopen. That is staggering stats. And think 
about the businesses and the jobs.
    Another stat we looked at was the LSU [Louisiana State 
University] Hurricane Center estimated that stronger building 
codes would have reduced wind damage in Hurricane Katrina by 80 
percent, or $8 billion.
    So thank you for your leadership, Congressman Curbelo and 
Congressman Sires. I am pleased to report that the core 
principles from this report have been turned into legislation 
and introduced in H.R. 5177, the National Mitigation Investment 
Act. This act provides a powerful incentive for States to adopt 
and enforce statewide building codes and authorize a first-of-
its-kind competitive grant program to improve building code 
enforcement.
    Further, the legislation includes a provision authorized by 
the chairman in H.R. 1471, authorizing Congress to look at the 
first comprehensive assessment of Federal disaster spending by 
Congress in over 20 years. Congressional leaders, policy 
experts, and GAO all agree strong building codes, and enhanced 
pre-disaster mitigation would provide life and cost-saving 
benefits.
    I urge you and your colleagues to support the National 
Mitigation Investment Act in order to rein in Federal 
Government's exploding costs. Chairman Barletta, Ranking Member 
Carson, and the subcommittee, I applaud you for your efforts, 
and thank you for taking up this issue. I would be happy to 
answer any questions.
    Mr. Barletta. Thank you for your testimony, Mr. Nelson.
    Mr. Mickey, please proceed.
    Mr. Mickey. Chairman Barletta, Ranking Member Carson, and 
members of the subcommittee, thank you for the opportunity to 
provide testimony on approaches for reducing the cost of 
natural disasters. My name is Kevin Mickey, director of 
professional development and geospatial education at The Polis 
Center at Indiana University Purdue University Indianapolis, 
which has the mission of linking academic and community 
expertise to create strong and resilient communities.
    I am here today as the chairman of the Multihazard 
Mitigation Council of the National Institute of Building 
Sciences, introducing a new and unique approach we have 
proposed for the incentivization of private property owners 
throughout the United States.
    The United States Congress established the National 
Institute of Building Sciences in 1974 to serve as an 
authoritative source for both the public and private sectors to 
improve the built environment. To achieve its mission, the 
institute has established 18 councils that engage building 
industry experts in examining and developing tools, 
technologies, and practices to meet identified needs. The 
institute and its Multihazard Mitigation Council, or MMC, and 
Council on Finance, Insurance, and Real Estate [CFIRE] have 
been particularly focused on opportunities to advance 
resilience and encourage the most cost-effective approaches to 
reducing the impacts of natural, as well as man-made, 
disasters.
    As you are aware, there have been numerous efforts at 
developing increased building codes and standards, mitigation 
programs, scientific studies of best practices, and definitions 
of resilience. And yet we continue to find that the penetration 
of hazard mitigation into the private sector is spotty and 
woefully incomplete.
    Now, this is not to say that these efforts have not been 
effective. As has already been pointed out, a 2005 MMC study 
showed that implemented mitigation strategies do indeed save on 
the order of $4 for every $1 spent. And currently, the 
institute is discussing with Federal agencies and the private 
sector a project to revisit this 2005 study and expand it to 
consider all Federal programs, the role of model building 
codes, and the benefits that mitigation provides to the private 
sector.
    Recognizing the significant benefits achieved through 
proactive investments in mitigation, the limited funding 
available to support disaster mitigation response and recovery, 
as well as the anticipated increase in disaster events, a new 
approach is necessary.
    The most cost-effective manner to achieve resilience is 
through a holistic and integrated set of public, private, and 
hybrid programs that capture opportunities available through 
investment and mortgages and equity real estate, insurance, 
finance, tax incentives and credits, grants, regulations, and 
enhanced building codes and their application. This focus on 
leveraging private-public sector opportunities to induce 
corrective action is called incentivization.
    The incentivization approach calls for input, consensus, 
leadership, and action from a broad spectrum of stakeholders 
representing the financial, regulatory, and economic processes 
that need to be developed and coordinated to make 
incentivization part of the Nation's economic fabric. 
Participants should include those who offer incentives such as 
insurance and finance-related companies, lenders, and 
foundations, as well as forward-thinking communities and 
Government agencies and important decisionmakers that most 
definitely need to include homeowners, businesses, and 
utilities.
    The MMC and CFIRE jointly published and developed a white 
paper entitled, ``Developing Pre-Disaster Resilience Based on 
Public and Private Incentivization,'' which provides a catalog 
of existing programs for different hazards that private and 
public sector stakeholders can evaluate and then modify or 
expand to develop incentives. The specifics of incentivization 
need to be tailored for new and existing construction, using 
optimal resilience measures beyond current law or custom, and 
to account for hazard risk, locality, business size, and the 
value of resilient strategies. One size cannot fit all.
    Incentivizing the means to achieve resilience before 
disasters occur focuses on monetizing the benefits for 
incorporating risk mitigation practices in the ordinary course 
of business. Participating stakeholders need sufficient 
confidence that using incentives to achieve resilience will 
justify investments, underwriting, and loan and grant programs. 
The private sector will not undertake resilience investments 
just because it is sensible, but because it is economically 
prudent.
    While my written testimony describes many opportunities for 
congressional action, I offer a few specific recommendations 
here.
    First, every Federal dollar associated with construction, 
community development, and infrastructure must include a 
requirement that the latest building codes be met or exceeded.
    Second, Congress and Federal agencies should examine all 
programs, particularly grant-making programs, to identify 
opportunities to support resilience.
    And finally, Federal investments and programs should 
require investment in mitigation.
    Thank you for the opportunity to testify before you today. 
Please consider The Polis Center, as well as the National 
Institute of Building Sciences as resources as you look to 
address challenges related to the built environment.
    I look forward to your questions.
    Mr. Barletta. Thank you for your testimony, Mr. Mickey.
    I will now begin the first round of questions, limited to 5 
minutes for each Member. If there are additional questions 
following the first round, we will have additional rounds of 
questions, as needed.
    Deputy Administrator Nimmich, why are the big disasters 
costing so much money now, and what factors do you think are 
driving this change?
    And then I would also like to hear Mr. Koon and Mr. 
Nelson's thoughts on that.
    Mr. Nimmich. Congressman Barletta, I think the biggest 
challenge is the continued movement of populations into high 
urban areas that happen to have been developed from historic 
perspectives in very dangerous areas along our rivers for 
flooding, along our coastlines for major storms, and on 
earthquake faults. The reality of people moving to the cities 
is one that we are going to face for the foreseeable future, 
and that only increases the potential of costs.
    Additionally, the value of property has gone up 
substantially over time. And therefore, the recovery costs 
continue to go up. What it cost to build a mile of roads 30 
years ago is very different than what it takes to build a mile 
of roads today. The only solution is, in fact, building for 
those future States that we look at, in terms of culverts that 
can maintain the flow of water, bridges that are better 
maintained, all of the infrastructure that needs to be there, 
as well as public buildings built to standards that allow for 
the potential of future disasters to be minimized.
    Mr. Barletta. Mr. Koon, Mr. Nelson?
    Mr. Nelson. Yes. Just to add to that, the wealth effect 
that has happened in America since the 1970s, clearly, the 
average home size has increased by about 1,000 square feet.
    Echoing the comment more and more Americans moving to areas 
that have higher risk, but adding on top of that--we see it in 
our statistics--if you are growing in an area with poor 
building codes versus good building codes, we see it in the 
claims data, we see it--where we shouldn't be seeing claims we 
see claims at low wind speeds, at small hail sizes. There is a 
better way forward, and we see it for States like Florida that 
have had very good adoption of building codes. There are proven 
studies that have shown how much it has benefitted. So just to 
add that to the conversation.
    Mr. Barletta. Mr. Koon?
    Mr. Koon. Thank you, Mr. Chairman. I concur with both Mr. 
Nimmich and Mr. Nelson.
    I would also add I believe that, over time, there has been 
a better understanding and better utilization of the funding 
that is available to communities after those types of 
disasters. And so perhaps we are fully recognizing all of the 
ways that we can use those Federal, State, and local dollars to 
help the community recover.
    I believe there is also probably an additional cost on the 
administrative oversight of those programs, and the program 
requirements to effect the recovery and subsequent mitigation. 
Those recovery programs can often stretch into the decades for 
some of our larger disasters. And so the administrative costs 
associated with those also add to those higher costs.
    Mr. Barletta. Deputy Administrator Nimmich, we continue to 
see new disaster aid programs emerge ad hoc in reaction to 
disasters. They all seem to have different rules and 
requirements and do not seem well coordinated or focused on 
obtaining the best outcomes.
    Don't FEMA programs contain strict requirements on 
eligibility, use, and cost effectiveness? And are you aware if 
other agency disaster programs include such requirements? And 
is this something that Congress should take a look at, so that 
we can streamline these programs and ensure that they are cost 
effective?
    Mr. Nimmich. Congressman Barletta, you are absolutely 
correct that we have very stringent codes and requirements in 
order to qualify for Federal dollars. And, as Mr. Koon pointed 
out, they often take a great deal of oversight to ensure that 
they are effectively and correctly implemented.
    I can speak through the Sandy legislation, that there was a 
requirement to capture all of the different agencies, including 
HUD [U.S. Department of Housing and Urban Development] and 
Federal Transit Administration, to ensure we had a more 
complete understanding of where the different investments in 
recovery were going. That is not consistent across all of the 
different disasters that exist.
    I will tell you that this year, for the first time, the 
administration passed the Federal Flood Risk Management 
Standards that require every agency, for every Federal dollar 
that is invested in recovery, to meet a standard for the first 
time. That includes the Department of Defense, as well as all 
the other agencies. So there are activities going on to try to 
ensure that we all build to a high standard. But the capture of 
those costs is not something that we currently do.
    Mr. Barletta. Now I recognize Ranking Member Carson for 5 
minutes.
    Mr. Carson. Thank you, Chairman.
    Mr. Mickey, in terms of community buy-in, various reports 
have been released about the rising costs of disaster, benefits 
of mitigation and the need to take steps to mitigate for 
disasters. So Congress has also acted to incentivize 
mitigation.
    So, for example, Congress authorized FEMA to provide 
additional Hazard Mitigation Grant Program funding to States 
with enhanced plans, yet only 12 States have adopted these. So, 
even with incentives, it is very difficult to get States to 
take action.
    How do we get the ideas in your report to the public and 
private sectors, and what is needed to actually get ideas 
implemented?
    Mr. Mickey. Well, I am happy to say that we have already 
taken some steps in that direction. Just this past January, the 
institute held a symposium here, in Washington, DC. That 
institute brought together experts in the industries that I 
identified in my testimony for the purpose of discussing 
exactly what was presented and, more importantly, to share 
their own ideas for how to incentivize resilience in their 
respective sectors.
    The next step that the institute is currently pursuing is 
to develop a stakeholder leadership council that consists of 
the leaders of the various stakeholder groups to include 
insurance, loan organizations, bond writing organizations, 
businesses, utilities, homeowners, and, of course, local, State 
and Federal Government. The goal of that council is going to be 
to work on formulating the mechanisms for incentivization.
    The idea that we have is that, by getting the buy-in of 
these stakeholders directly--because they will be the ones 
coming up with these incentive strategies--that others will 
then follow. And they are going to be incentivized to help 
build an enhanced economy that does not currently exist for 
writing insurance, originating loans and bonds, and generating 
construction activity.
    Ultimately, the goal, as we see it, is to produce a set of 
products that consumers want. Let me give you a couple of 
examples that you will find in our full study.
    State Farm Insurance offered a premium discount in Texas 
for installation of impact-resistant roofs. The result was that 
products related to impact-resistant roofs went from 10 in 1998 
to more than 1,000 in the year 2003. And that program has now 
expanded out into 26 additional States. According to State Farm 
Homeowners, the IRR product, or the impact-resistant roof 
product, is something that they now want.
    And then, just earlier this week in Washington, the mayor 
of the city of Fairhope, Alabama, Tim Kant, was attending the 
Resilience Building Codes Forum, and he made a statement that 
his community is now considered one of the most desirable 
places to live, specifically because their homes are recognized 
as being more resilient. And that community is one of the 
places where the fortified program is found.
    The institute is planning to serve the role of identifying 
these solutions that I have mentioned. We recognize that there 
are plenty of best practices out there. What we want to do is 
bring together the stakeholders to identify those best 
practices and see them replicated across the industry. We 
recognize that costs are high, and we are looking for ways to 
reduce them, and we believe this is a creative approach.
    Ultimately, we believe that activities such as implementing 
building codes need to be started to be viewed as a carrot, not 
as a stick. And if the incentives are appropriate, we think 
that can happen.
    Mr. Carson. Thank you.
    Mr. Koon, you have mentioned FEMA's new customer service-
centric focus for the Public Assistance Program as a positive 
step forward. Are there other actions FEMA could take with 
respect to the Public Assistance Program in order to reduce 
disaster costs and even losses?
    Mr. Koon. Thank you, Ranking Member Carson. I believe that 
continued implementation of some of the procedures that were 
highlighted in the Sandy Recovery Improvement Act in ways that 
will help us expedite funding to the locals could result in 
cost savings and improved recovery, as we move forward.
    We are eager to continue to work with FEMA on this PA 
[public assistance] reengineering process, to make sure that 
they are as customer-centric as possible in this situation, so 
that we can help, again, get those communities back up on their 
feet as quickly as possible, at a minimal cost to the Federal 
Government.
    With regards to the question you asked Mr. Mickey earlier, 
with regard to incentives, if I may, we have done a very good 
job on providing incentives for programs. You mentioned the 
enhanced mitigation program, there are incentives offered 
through the National Flood Insurance Program, Community Rating 
System, there are incentives offered through the Sandy Recovery 
Improvement Act for debris removal. None of those, I believe, 
have fully met what they intended to do.
    And so, continual reevaluation of those incentive programs 
to determine why they are not being taken up at the level we 
anticipate would be necessary, and then go back and improve the 
processes by which we implement those programs, would help them 
meet the maximum good they were designed to--intended to 
effect.
    Mr. Carson. Thank you. And Administrator Nimmich, earlier 
this week the White House hosted a conference on resilient 
building codes. Included in the fact sheet issued by the White 
House it stated that FEMA is developing a more detailed plan to 
be put forth for additional public discussion in a notice of 
proposed rulemaking.
    Has FEMA finished reviewing all the comments and arrived at 
determining that it will definitely go forward with rulemaking 
on disaster deductible concepts, if so?
    When can Congress and stakeholders expect the proposed rule 
to even be issued?
    Mr. Nimmich. Representative Carson, thank you for the 
question. The deductible process has been one where we have 
reached out heavily to the user group. And, as Ms. Clark 
indicated, we have received over 150 very detailed responses to 
the advanced notice of proposed rulemaking. And we went through 
the advanced notice of a rulemaking process in order to get 
that type of feedback that Ms. Clark indicated, where there are 
concerns that this might just be the ability to transfer costs 
from the Federal Government to State and then to local 
communities.
    The intent here is exactly what we have been talking about, 
to incentivize and make more consistent the ability for 
communities to invest in mitigation and preparedness 
capabilities. We are now going through those 150 comments to be 
able to come up with an actual proposed rule that will have 
details in it that we will then go out through the proposed 
rulemaking process to get specific comments back on those 
rules. We anticipate that that will be out some time this 
calendar year, sir.
    Mr. Carson. Thank you. And I don't know where we are on 
time, Mr. Chairman, but I yield back.
    Mr. Barletta. Thank you, Ranking Member Carson.
    Mr. Graves, you have 5 minutes.
    Mr. Graves of Louisiana. Thank you, Mr. Chairman.
    Administrator Nimmich, who is in charge within the Federal 
Government of our national efforts in terms of community 
resilience? Which agency?
    Mr. Nimmich. So, as you would expect, Congressman, FEMA, 
through the National Preparedness Program, provides the 
guidance for the Federal Government to be able to assist State 
and locals in developing their preparedness programs. And FEMA, 
working with the States through their threat estimating 
program, as well as their preparedness reports, captures that 
information, as well as for the Federal Government----
    Mr. Graves of Louisiana. OK.
    Mr. Nimmich [continuing]. But each agency themselves are 
responsible for their support to the preparedness plan.
    Mr. Graves of Louisiana. Got it. Administrator Nimmich, do 
you acknowledge the statistics that Mr. Nelson referenced in 
regard to studies indicating that proactive investments in 
hazard mitigation generate cost savings?
    Mr. Nimmich. Yes, sir. I said it in my opening statement, 
and that is what the deductible----
    Mr. Graves of Louisiana. Great.
    Mr. Nimmich [continuing]. Process is trying to----
    Mr. Graves of Louisiana. Thank you. Do you see any of the 
work of the U.S. Army Corps of Engineers as being efforts to 
reduce hazards or address mitigation strategies?
    Mr. Nimmich. Sir, we work closely with the Army Corps of 
Engineers, and----
    Mr. Graves of Louisiana. If you could just--if you don't 
mind, just a yes or no. I would appreciate----
    Mr. Nimmich. Sir, I am not comfortable answering just a yes 
or no, but would do so for the record. We work very closely 
with the Army Corps of Engineers, and I do believe that an 
awful lot of their efforts go to reducing the impacts of 
potential future disasters. In North Dakota, they have worked 
very closely with the city of Fargo to be able to develop----
    Mr. Graves of Louisiana. All right.
    Mr. Nimmich [continuing]. Capabilities----
    Mr. Graves of Louisiana. Thank you. I will go ahead and 
answer these so I don't burn through all the time.
    So you have the U.S. Army Corps of Engineers that spends 
money in addressing flood damage reduction projects, hurricane 
protection. The administration has budgeted, I believe it was, 
$1 billion competition, resiliency competition, through HUD. 
You have a climate resiliency fund the Department of the 
Interior is trying to establish under the last budget request. 
I think it was $2 billion. FEMA has a Hazard Mitigation Grant 
Program and a Pre-disaster Mitigation Program. Does it really 
make sense for us to have five different programs out there, 
all attempting to address various aspects? Are these properly 
coordinated? Are they properly prioritized?
    And, you know, the reason I bring this up, I am from south 
Louisiana and we have had more than our share of disasters, 
whether it be Hurricanes Katrina and Rita coming up from the 
south, we had record high water on the Mississippi River in 
2011 and again this year in January for the first time ever, in 
January of this year. We had Hurricanes Gustav and Ike in 2008, 
Hurricane Isaac in 2012. We have had more than our share of 
disasters.
    And watching over and over again, as we come in and we have 
FEMA come in and pick up the pieces after a disaster, together 
with millions and millions of dollars spent by our parishes and 
spent by our State government, the Corps of Engineers in some 
cases--I can think of a project in St. John Parish, St. Charles 
Parish affecting Ascension, Livingston, and St. James Parishes, 
that that project has been in the study phase with the U.S. 
Army Corps of Engineers now for over 40 years, over 40 years.
    Mr. Chairman, Mr. Ranking Member, my point here is that, 
look, everyone wants us to reduce disaster spending. Everyone 
does. The solution here, as I think Ms. Clark noted, Mr. Koon 
noted, the solution here is making the principal proactive 
investments in making our communities more resilient.
    In recent years we have had FEMA, with their 500-year flood 
risk management regulations. We have had Biggert-Waters in 
2012, the revisions in 2014. We have proposals now to increase 
the cost share associated with disaster response on our 
counties, on our parishes, and our State governments.
    Mr. Chairman, my point is that making proactive investments 
is the solution to reduce our overall disaster expenses. We 
estimated that if we had spent somewhere around $8 billion or 
$9 billion, simply finished authorized projects in south 
Louisiana that were supposed to be built by the U.S. Army Corps 
of Engineers, we could have saved an estimated 90 percent of 
the about--and you can justify numbers--anywhere from about 
$120 billion to $150 billion that were spent in response to 
those 2005 hurricanes. We could have saved that. And not to 
mention--and very, very important--in fact, more important, Mr. 
Chairman, we think we could have saved over 90 percent of the 
1,200 lives that were lost in south Louisiana.
    So, all of these efforts by FEMA I think are being done in 
a vacuum. We need to be coordinating, better coordinating our 
efforts to be proactive, to protect and make our communities 
and our ecosystem more resilient, and stop all this coming in 
after the fact and spending exponentially more dollars. There 
are studies, there are models. Yet all we are seeing, rather 
than following the data, following the recommendations and the 
outcomes of these studies and these experiences following these 
catastrophic disasters, instead we are further making disparate 
investments in programs that aren't really contributing or 
heeding the recommendations of these reports. I am very 
concerned about what--this trend that we are seeing.
    And lastly, Mr. Chairman, I just want to say that in south 
Louisiana much of our vulnerability is actually attributable to 
the actions of the Federal Government. We have lost 1,900 
square miles of our coast. The majority of that is because of 
how the Corps of Engineers manages the water resources in this 
Nation. That is why we have lost, that is why we have become 
more vulnerable.
    Arkansas doesn't care when hurricanes come because 
Louisiana is their buffer. Our buffer is disappearing, and that 
is why you are seeing these costs.
    And so I just want to urge the committee, Mr. Chairman, Mr. 
Ranking Member, as we move forward on legislation we need to 
make sure we don't get too myopic in this view, and that we are 
looking comprehensively at all of these efforts that are 
underway that, quite frankly, should be under this 
subcommittee's jurisdiction. I yield back.
    Mr. Barletta. Thank you.
    Mr. Sires?
    Mr. Sires. Thank you, Mr. Chairman. You know us. We learn 
from all these disasters.
    Mr. Nimmich, we picked up how to better construct, do 
better codes, everything else. Why do you think some of these 
States are so reluctant to do this mitigation codes and 
reinforcement? Why do you think that is?
    Mr. Nimmich. Sir, I think the decision on building codes is 
almost always local, and those decisions based on other 
economic factors, desires for certain development.
    But I do think that we, as the Federal Government, need to 
continue to ensure that when we invest, it is invested to 
codes. Currently, FEMA has out for comment with our stakeholder 
groups changes to our Public Assistance Program that would 
require whether a State has or a community has code or doesn't 
have code. If they don't, if they want us to build back their 
infrastructure, it will have to be built back to either a 
national or an international code.
    So we are taking it very seriously to say even if a 
community doesn't feel that codes are of value, we do. And when 
we invest Federal dollars, we will build back to a code.
    Mr. Sires. You know, one of the things that bothers me 
about New Jersey is the fact that 3 years later we still have 
people that have not gone back to their homes. And there is 
plenty of blame to go around, you know.
    I think that, in terms of these disasters, you not only 
have to mitigate it before, but I think there has got to be 
some sort of post-disaster, where you are ready to come in and 
watch over some of these guys that are the fraudulent 
applications and everything else, and not take years before we 
can come up with the people who are perpetrating a fraud.
    And to me, I think you have to be ready right after the 
disaster. Can you talk to that?
    Mr. Nimmich. Yes, sir. And I can proudly say that we have 
moved rapidly since Katrina to ensure that we have programs 
that have as much protection as possible.
    But I will tell you, sir, that if we have to err on the 
side of supporting a valid requirement and a fraudulent 
requirement, we are likely to support that requirement. But it 
takes time to go back and relook.
    And as you know, in New Jersey now you are seeing the first 
cases of prosecution of fraudulent--where people have taken 
money from those that need to recover in their primary homes, 
claiming that their secondary home was a primary home, and 
taking those dollars away from those people that need it.
    It does take time, and we have to realize that during that 
immediate post-disaster we want to make sure that those people 
that need the money get it. And there will be people that take 
advantage of it, but we don't give up. And as you said, sir, it 
may take too long, but we don't stop. We continue to go back 
and recoup those monies from people that fraudulently or 
accidentally applied for resources that they didn't deserve.
    We are down below the national standard--from financial 
institutions in recovering money, down below 1 percent. So I 
think we do a pretty good job of ensuring that the money goes 
to those people who deserve it and need it.
    Mr. Sires. You know, I come around--I used to be one of 
these guys that you have to require certain things. And I come 
around a lot to providing incentives. Because if the Federal 
Government is going to give you some money, I think that 
mitigation codes or storm codes should be part of it.
    I look at these disasters in the Midwest. I see these 
tornadoes, Oklahoma--I am not trying to single out Oklahoma, 
but it just seems that they get more than anybody else. And I 
see where schools are even damaged. You know, to me, if the 
Federal Government is going to give a State money to build a 
school, you should require a stronger code to build the 
schools. And I understand that these schools were built before. 
But, you know, going forward, I think that is something that we 
should look into, because some of the schools always--they 
serve as shelters, too, in some of these communities. And I see 
the damage in some of these schools and some of these homes.
    So I think--I am coming around to the idea of incentives, 
Mr. Chairman, to provide these people so they can build the 
kind of codes that they need to deal with some of these 
disasters. Thank you.
    Mr. Barletta. Thank you. I will now begin a second round of 
questions.
    Commissioner Clark, I understand your district had major 
wildfires that destroyed a tremendous number of homes and 
property. Can you explain some of the challenges you have had 
trying to mitigate the risk of post-fire flooding? And do you 
have any recommendations for Congress to improve our mitigation 
programs?
    Ms. Clark. Thank you, Mr. Chairman. Yes, we have, 
obviously, had--and I don't know what fair share is, but we 
have had more than our fair share of disasters in El Paso 
County, Colorado. What I would like to talk about specifically 
is the things that I think we can do from the standpoint of 
local community resiliency.
    And I think that what tends to happen--and it happens at 
the local level, at the State level, and particularly at the 
Federal level, is we have silos built up between agencies. The 
fire that happened in Waldo Canyon was almost more than 95 
percent on Federal forest land. That pre-mitigation needs to 
happen from the Federal level, because that is Forest Service, 
and the Forest Service is now spending more than 50 percent of 
its budget on--frankly, on responding to wildfires, versus pre-
mitigating ahead of time. We have no control over that at the 
local level.
    What we do have control over is working with fire-adapted 
communities, community wildfire protection plans, and providing 
incentives, as some have said up here, which is very important, 
but for individuals to be able to mitigate ahead of time, to 
provide firewise communities.
    I was just up in, actually Crystal Park, which is a one-
way-in, one-way-out community built up on the mountainside. And 
they have taken steps to do that. And some of those programs 
that help them buy fire equipment to be prepared locally, to 
take that ability to look at, from a personal standpoint, to be 
able to provide that mitigation, will be helpful. We tend to be 
really--you know, when we look at an ounce of prevention is 
worth a pound of cure, doing that pre-mitigation ahead of time.
    I also think it is important to note that we have--when 
there is a disaster--and I have a small business, when the fire 
happened I lost thousands of dollars of reservations, and then 
we have this rolling disaster that keeps happening--to try and 
make sure that those that may not live in wildland interface 
areas, where the drainage all comes down into a small 
community, to be able to look at the fact that that mitigation 
immediately following the fire will provide the resiliency to 
slow down the debris and the large flash floods that happen as 
a result. And it is hard to understand, if you are not from 
Colorado, because--if you are not from a Western State that has 
those drainages that drain right down into it.
    So I think tearing down the silos, understanding there is 
an impact on small business and how devastating that can be--
one-third of small businesses go out of business after a major 
incident, and I think that that is really important, and 
looking at the flexibility in the requirements. Even though we 
want--we definitely want accountability, but sometimes the 
requirements preclude you from even asking for the particular 
money that you may otherwise need.
    Mr. Barletta. We talked a lot today about how much the 
Federal Government pays out for disasters. But the other major 
payers in disasters are insurance companies.
    Mr. Nelson, can you discuss how insured losses generally 
compare to the Federal assistance provided in the wake of a 
disaster?
    Mr. Nelson. In the wake of a disaster it is the role of the 
insurance company to make that insured whole again. And so we 
are paying for the building, we are paying for the contents. If 
you are a small business, we are giving you business income 
interruption coverage. We are also providing additional living 
expense. And so significant dollars, compared to--you know, 
usually individual grants are small grants to consumers. They 
are not going to make you whole again. They are not going to be 
enough to rebuild your home, in general speaking.
    So, it is important. The insurance industry plays a major 
role in natural disasters. And our trends, because of the 
weather volatility, we have been seeing those trends go up. And 
so this is an important concept because what do insurance 
companies do? We spread the risk over people and over time. And 
as the risk changes, the prices change. And so it is important 
that we bend the cost curve for the Federal Government and bend 
the cost curve for consumers.
    Mr. Barletta. Every one of you mentioned the importance of 
mitigation and how evidence shows that for every $1 invested, 
$4 is saved. Most Federal mitigation funding is provided 
through the Hazard Mitigation Grant Program after a disaster 
declaration.
    I ask this of every one of you on the panel, if you could 
give a brief answer. How can we more proactively address the 
mitigation and shift the investment to before the catastrophe?
    Mr. Nimmich. Congressman Barletta, I think the first thing 
I need to do is again thank the committee and the Congress for 
the post-Sandy legislation that allows that mitigation money, 
that post-disaster mitigation money, to be identified much 
earlier in the process, and then be applied as part of the 
recovery process.
    Clearly, as we look at all of the different mitigation 
programs we have--pre-disaster, in 2015 Congress gave us the 
authority to do post-mitigation or hazard mitigation for fire 
grants, to be able to restore those burned areas in a much more 
robust way. I would ask that we could consider reauthorizing 
that ability to use the fire mitigation grants as a hazard 
mitigation grant developer.
    But the reality for us comes back to how do you incentivize 
every level, from the individual, through insurance programs, 
to the local to the county to the State and the Federal 
Government to be able to invest in that. We believe that the 
deductible offers that opportunity. We continue to need to work 
with our stakeholders to define what the reasonable level of a 
deductible should be, and then how do those building codes and 
the investments that Ms. Clark has indicated that the counties 
and the communities do reduce that deductible in order to be 
able to support those communities that have invested in their 
own well-being.
    I do believe that it is mitigation that ultimately reduces 
the cost of a disaster, and we need to find proactive ways, as 
you have all indicated, to incentivize that approach.
    Mr. Barletta. Ms. Clark?
    Ms. Clark. Thank you, Mr. Chairman. As it relates to the 
Hazard Mitigation Grant Program, it is a very important 
component of, I think, what communities need to be provided 
for. There are some issues, I think, within the HMGP programs 
that need more flexibility, however, in order to be able to 
utilize those funds best at the local level. We see sometimes 
that there is not an understanding of unique situations, and I 
will give an example
    In 2012 was the Waldo Canyon fire. We just closed on three 
houses 2 weeks ago for several homes that were in the floodway 
as a result of a fire that happened on Federal forest land. 
They had never had flooding ever before, and it has taken us, 
really, that length of time to get that completed.
    As it relates to, additionally, the Hazard Mitigation Grant 
Program, we at our Office of Emergency Management appreciate 
being able to utilize those dollars, but sometimes the 
accountability, where you may see it as accountability, the 
paperwork is so extreme for such a small amount of money that 
it makes it really unusable for us to even apply for the 
grants.
    And so, we do take it very seriously, but I think sometimes 
those programs need to be looked at as how can those dollars 
actually get to the folks that need the help and provide some 
additional assistance for those individuals who want to take 
personal responsibility for trying to reduce mitigation--to 
reduce the disaster, eventual disaster declarations, by looking 
at being proactive on their own personal property.
    The Black Forest fire was almost entirely on private 
property. That was the second fire. So we have two different 
fires, and we have seen different problems in each of those.
    Mr. Barletta. Thank you.
    Mr. Koon?
    Mr. Koon. Thank you, Mr. Chairman. The--as a director of 
the Florida Division of Emergency Management, I have the luxury 
of a fairly large staff and adequate funding. And so, every 
time there are new programs out there, every time there are new 
incentives, I have personnel whom I can assign to that to make 
sure that we take full advantage of that program.
    However, a good number of States do not share that luxury, 
and a good number of the counties across the country do not 
have that same luxury. So every time a new program is put into 
place, they have to determine how they can help meet the needs 
of that program, because they are using current staffing, 
current year budgeting and the potential for a payoff down the 
road.
    So I think a few things would assist in this effort. What 
would be--as Mr. Graves suggested, consider clarifying, 
consider consolidating, consider streamlining existing programs 
today, rather than creating just additional new programs, which 
would enhance the administrative burden on already overworked 
officials at the State and local level.
    I think a better data analysis of the true costs of 
disasters and how they impact all levels will help us calculate 
the true return on investment for our participation in these 
programs, and help us make those decisions.
    And finally, moving the mitigation cycle, moving the 
mitigation program forward, and so that it is not something we 
start thinking about on day one of the recovery, it is 
something that is done ahead of the disasters, so that if the 
funding comes along with that disaster, we are ready on day one 
with actionable mitigation plans to help--implementing those 
programs, and we don't rebuild exactly as we were before.
    Mr. Barletta. Thank you.
    Mr. Nelson?
    Mr. Nelson. First, I just want to start with we have to get 
the word out about mitigation. There is a perception that 
mitigation costs so much money to consumers. Travelers, we are 
a proud supporter of Habitat for Humanity. We went out and we 
built a dozen fortified homes along the coast of America, and I 
personally participated in building one in New Haven, 
Connecticut. The average cost is only 2 to 5 percent on new 
construction. And so, we just have to make sure that consumers 
understand this. And so that is first.
    Second, clearly, you got a difficult decision in front of 
us. You know, spending is so difficult in Congress today, 
everyone understands that. But we have to consider spending 
more at pre-disaster mitigation funds--again, proven techniques 
with IBHS and other studies--and evaluate that, and evaluate 
streamlining some of these FEMA programs. Thank you.
    Mr. Barletta. Mr. Mickey?
    Mr. Mickey. I think just as importantly, we have to 
understand that the action of mitigation is not simply 
something you do to check a box and get FEMA to sign a check 
over and move on. It is something that needs to be a proactive, 
positive investment to incentivize, again, those communities we 
are promoting through the institute to take positive actions.
    Mr. Barletta. Thank you.
    Ranking Member Carson?
    Mr. Carson. Thank you, Chairman.
    Ms. Clark, disaster assistance reformed under the act of 
2015, the committee calls for a very comprehensive study on 
trends and disaster costs and losses. As you mentioned earlier, 
local government bears a large portion of the disaster costs, 
yet data is very scarce. What is NACo doing to collect the 
information so that the data can be considered as part of the 
comprehensive study, and ensure that current Federal disaster 
costs are not just being shifted to local communities?
    Ms. Clark. I am assuming that is for me. I wanted to say 
that I think that that brings up a very----
    Mr. Carson. Or Mr. Koon.
    Ms. Clark. OK. I will start and then--I think that the--
that local government really is here from the Government, and 
here to help. We want to know from you how we can best provide 
you the data and the information.
    For those of us who have done this before--and in my case 
we have had four declared disasters, so we have got a lot of 
information. And I think it would be helpful to sit down with 
those communities that have been through the processes, and all 
the different silos, and to be able to have feedback from us on 
how to change things that--policies that may not be working in 
the best interest, first of all, of our communities and, 
secondly, of our local governments.
    Mr. Carson. OK.
    Mr. Koon. Ranking Member Carson, the question you asked is 
a question that many of the folks asked as they were responding 
to the proposed deductible concept from FEMA, which is how do 
we capture all of those costs? What is the methodology? What is 
going to apply in that situation? Is it you go out and remove a 
tree that just fell in the road overnight, or do you--is there 
a certain threshold at which you start measuring those dollars? 
We still are having those kind of conversations to figure out 
exactly what costs do we need to capture.
    But I do agree that it is very important that we do so 
because, again, that helps feed the return on investment 
calculations that we need to do in this situation.
    The flip side of what I offered earlier--and the fact that 
I have a fairly large agency and a fairly adequate budget, is 
that the threshold for Florida to receive a Presidential 
declaration is also fairly high. And so, we can have a $10 
million or $20 million or even a $25 million disaster in the 
State of Florida that will not be eligible for a Federal 
declaration. So every year the State of Florida spends hundreds 
of millions of dollars internally at the State and local level 
to help us recover from those situations.
    So I concur that we should develop methodology by which we 
can all operate off the same sheet of music when understanding 
what these costs are.
    Mr. Carson. Yes, sir. Thank you.
    Mr. Nelson, you mentioned in your testimony that the 
Insurance Institute for Business and Home Safety simulating 
disaster conditions on homes and businesses in a controlled 
environment, you mentioned that. What types of adjustments to 
building codes has the institute found to be most effective in 
keeping a structure standing after a disaster? And how much 
would these changes cost during new construction?
    Mr. Nelson. You know, IBHS, we have come out with a program 
called FORTIFIED. There's a bronze program. The bronze program 
concentrates on the roof coverings. And so we have looked at 
taping the roofs, the seams on the roof deck. And maybe that is 
about $500 to $1,000. And that prevents water intrusion in case 
you lose your shingles. So that is the first step.
    The second step that is a proven technique is really 
bolstering all your openings, either covering your openings or 
putting some other reinforcements in place. And then the gold 
standard is looking at the building kind of end to end, looking 
how it is anchored at your foundation, through the walls, and 
to the roof.
    And so, these are techniques that we are very happy to say 
some States have embraced. Alabama, coast of Alabama has now 
embraced the FORTIFIED standards within their codes and their 
coastal counties. And they have also put in a program to try 
and--for mitigation grants.
    And so, we are seeing a lot of success with this program. 
We are even seeing some builders voluntarily building these 
homes.
    Mr. Carson. Thank you.
    And lastly, for a fellow Hoosier, Mr. Mickey, The Polis 
Center provides valuable services necessary to understanding 
the disaster threat and risk. How does The Polis Center help us 
understand, make its services known to others, and can you 
expand on some of the successful collaborative projects with 
State and local entities that the center has taken?
    Mr. Mickey. Thank you for the opportunity to talk both 
about The Polis Center and, quite honestly, the State that I am 
very proud of, the State of Indiana.
    Polis has been around since 1989. We have had 27 years of 
successfully linking community and academic expertise. Our 
goals are to build capacity in the State's agencies, the 
volunteer associations, the citizens of the State of Indiana, 
and so forth.
    We have done a lot of work in emergency management, but the 
reason that we have been successful is not because uniquely of 
the resources in our center, but because of the atmosphere that 
exists in the State of Indiana.
    Case in point, within Indiana we have had the privilege of 
working with the Indiana Department of Homeland Security to 
complete mitigation plans in close collaboration with the 
counties and cities and towns of the State of Indiana. The 
approach we take is highly collaborative. So, unlike many 
situations that we hear about where a plan is created and set 
aside on a shelf, if you would--which, unfortunately, I think 
does often happen--that plan becomes a living document, 
something that the community is engaged in, that people are 
brought to the table to discuss and be a part of. And I think 
that is a critical component of making mitigation a success.
    Part of the reason that we are also successful--and 
something I am exceedingly proud of--is in the State of Indiana 
we understand the importance of information. FEMA created a 
tool that I am sure many of you are aware of a few years ago 
called Hazus-MH. And Hazus has become a very significant part 
of the portfolio of resources in the State of Indiana that we 
use, the technology that allows communities to estimate the 
impact of hazards, specifically floods, earthquakes, and 
hurricanes, and they are able to do that in a more profound and 
successful way by integrating local resources.
    In my State I am happy to say that we have 100 percent of 
the counties that, even though they have disagreements, to be 
sure, they have managed to find a way to agree to share 
information. So anyone, anywhere, any time can go out to the 
IndianaMAP and download every single parcel in the State of 
Indiana: road information, hydrology information, and of 
course, hazard information. That information, combined with 
other resources in the State, makes it possible for our 
citizens to be much better protected and much better able to 
respond to disasters than others might be.
    We have taken that success story, I am proud to say, to 
other States as well. We are very much about building capacity. 
We have worked extensively in the States of Georgia, in West 
Virginia, in many other areas. In total, we have worked in over 
36 States, including, I believe, every one represented by 
members of this committee, and over 100 cities.
    Building capacity means building tools, it means building 
work flows, it means, very importantly, education. And not just 
in how to do hazard analysis, but also what that means to a 
community, in terms of its long-term resiliency.
    We believe firmly in connecting the fabric of the community 
to the solution. So hunger, homelessness, issues like that are 
just as important in understanding how a community will or will 
not be resilient to a disaster as understanding whether a 
building is going to fall down or stay upright. And we look at 
all of those things and try to bring them together in a 
synergistic way in conversations with a lot of people to take 
advantage of that knowledge.
    Mr. Carson. Thank you, sir.
    Thank you, Mr. Chairman. I yield back.
    Mr. Barletta. OK. Mr. Graves?
    Mr. Graves of Louisiana. Thank you, Mr. Chairman.
    Mr. Nimmich, the Biggert-Waters 12 directs FEMA to 
incorporate simulations of climate change into some of the 
estimates that you develop in regard to premiums. Could you 
discuss how FEMA is doing that, and how you are addressing 
uncertainties in regard to climate models?
    Mr. Nimmich. So through Biggert 12 we have been required to 
use the best science possible to determine the flood risk map, 
sir, and we continue to work with the scientific community and 
local communities to be able to identify what those potentials 
might be in the future, in terms of climate adaptation, 
particularly with the rising tides in flood zones.
    Mr. Graves of Louisiana. Yes. And so the question is how do 
you plan to address the uncertainties in regard to the models 
of future sea rise and potential for storm intensity changes 
and things along those lines?
    Mr. Nimmich. Sir, I will answer that for the record.
    Mr. Graves of Louisiana. Thank you. Another question. The 
Technical Mapping Advisory Council that was established, they 
indicated in a recent report that they believe that there was 
about a 40-percent uncertainty rate associated with some of the 
flood models that were used.
    If you take that degree of uncertainty, which is 
extraordinary, and you put on top of it trying to estimate 
future changes in sea rise, future changes in the potential for 
storm intensity and frequency, it seems like we are getting to 
a range of uncertainty that--it is just no longer helpful to 
even use those types of models and predictive information. 
Could you comment on that?
    Mr. Nimmich. Yes, sir. I don't think you can go to the 
extent of not using some sort of a model or a predictive 
capability when you are trying to determine whether mitigation 
and preventative actions need to be taken. So, while there is a 
certain degree of uncertainty, we continue to use the best 
available information, based on a wide range of scientific data 
that is available.
    Is there uncertainty? There is always uncertainty in it. 
But we have to start somewhere to be able to create a basis on 
which the risk exists in the community.
    As you well know, sir, in your area we have just 
experienced floods in northern Louisiana that no one would have 
expected, based on the science that was there. So there is a 
great deal of uncertainty when you deal with any weather event. 
So we need to continue to find the best science at the time 
that we create the risk map and then, as often as possible, 
come back and reevaluate that science.
    Mr. Graves of Louisiana. Yes, and I certainly concur that 
we need to be using the best information we can in regard to 
informing decisions. The concern is that, as you know, there 
are significant consequences of determining flood maps and NFIP 
premiums. And with your 500-year flood risk management, there 
could be significant and severe financial implications.
    My point is that, having such severe implications, yet 
having so much uncertainty with the predictive models, that is 
not necessarily a very comfortable combination of issues. And I 
just want to urge, as you move forward, that you keep that in 
mind, that--you need to keep in mind the reliability of the 
information and models, and take into account the consideration 
of financial implications on counties, parishes, and others, 
moving forward.
    Director Koon, first I want to say that I know a number of 
people that know you, and you have a great reputation. Thank 
you for being here. And I appreciate your testimony.
    A week before last, Congress--the House of Representatives 
passed H.R. 2901, which was legislation--and Mr. Nelson, excuse 
me, I am going to ask you a question on this, as well--that 
bill, what it does is it begins--or it allows for private flood 
insurance to serve effectively as a surrogate for the NFIP. 
Sounds like a good idea. Private sector, in many instances, 
could be more efficient than Government can.
    So, face value, sounds like it is a good idea. However, 
being from your area, being from the area where I was born and 
live, I am very concerned that what we are going to see is we 
are going to see private insurers that come in that start 
cherry-picking the policies that have the lowest risk.
    And so, what ends up happening under Biggert-Waters 12 and 
the reforms in 2014 is you are left with the policies that have 
higher risk.
    Now, Biggert-Waters 12 and the revisions from 2014 require 
that the loan that was given to NFIP following the 2015 floods, 
that it be repaid. It requires that a reserve fund be 
established. It requires that actuarial rates be charged under 
flood insurance.
    So my point is that the private sector insurance companies 
aren't going to have those same financial burdens. All they are 
going to have is whichever policies they choose. The NFIP is 
going to have now a smaller pool of ratepayers because the 
private sector is pulling some of those off. So you are going 
to have the higher risk, small pool that are still going to be 
subjected to establishing a reserve fund, paying off this debt 
of, whatever it is, $17 billion.
    Are those concerns--am I--should I not be concerned about 
this? Is there something there that we should be concerned 
about, and should NFIP reform be more comprehensive than just 
doing H.R. 2901?
    Mr. Koon. Thank you for the question, Congressman. And I 
think, actually, the debt is closer to $23 billion on the 
National Flood Insurance Program.
    Mr. Graves of Louisiana. Thank you.
    Mr. Koon. I think they would like to get to $17 billion.
    The answer--my opinion is that there needs to be more 
comprehensive reform of the National Flood Insurance Program. 
And I would urge this committee to become engaged with that 
conversation next year, when it is up for reauthorization, to 
work with the Committee on Financial Services on that, because 
there is lots of components of the National Flood Insurance 
Program that I think directly relate to the conversation we are 
having here today with regards to mitigation activities that 
can take place across the country.
    One of the things that I express quite frequently in the 
State of Florida--and did so just yesterday before the 
Governor's Hurricane Conference general session--as a result of 
some of the actions during Biggert-Waters of 2012, we have seen 
a significant reduction in the number of flood insurance 
policies across the country, and specifically in the State of 
Florida. The State of Florida has lost over 10 percent of the 
flood insurance policies. We have gone from just north of 2 
million flood insurance policies in the State to about 1.8 
million.
    What that means is those citizens, the next time they have 
a disaster, next time they have a flood in their community, 
they are not going to be able to recover like they would have, 
had they had flood insurance, and there will be additional 
costs imposed upon the Federal Government because they may now 
be eligible for assistance from FEMA. They may be eligible for 
assistance from the State, et cetera. So those costs are going 
to be borne by the individuals, those costs are going to be 
borne by Government.
    So a comprehensive analysis and reform of the National 
Flood Insurance Program, I believe, is completely appropriate 
at this point.
    Florida, last year in the legislative cycle, did do some 
things to reduce some of the regulatory burdens on private 
flood insurance in the State of Florida. And so now there are 
private insurers offering flood insurance policies in the 
State. It is very nascent at this point. There is probably 
2,000 to 3,000 private flood insurance policies in the State, 
but it is a start.
    I do share your concern about some of the cherry-picking 
aspects, and I am not an insurance expert, and I will defer to 
Mr. Nelson on that, but we have had a similar situation in the 
State of Florida with the Citizens Insurance Company and the 
wind-borne insurance. They have depopulated a large segment of 
their policies to the private market, and still remained 
financial feasible. So I believe Mr. Nelson may be able to 
elaborate on that a little bit.
    But I believe, again, comprehensive reform of the National 
Flood Insurance Program is absolutely appropriate at this 
point, and can tie in some of the mitigation activities that we 
have discussed thus far.
    Mr. Nelson. Thank you. First, let me say I would echo your 
concerns that you are raising. I think those are profound 
issues that we have to evaluate. So----
    Mr. Graves of Louisiana. Mr. Chairman, for the record, I 
just want to note that he called me profound.
    [Laughter.]
    Mr. Nelson. So the--I do think, if you just step back for a 
minute, Travelers--let me just back up. Travelers, we do write 
flood insurance on a commercial basis for commercial insurance. 
We do not write homeowners flood insurance and we have no plans 
to enter that market. We also do not have a formalized position 
on this, I will just express my own points of view.
    So when you look at it--I have looked at a lot of the FEMA 
rate plans--I think they need to modernize their rate plans. 
The private industry should not be able to compete with FEMA on 
price. Remember, we have to buy reinsurance. We have to have 
enough capital to meet our obligations. That means we have to 
have a pool of money. Typically, that is our shareholders' 
money, so they have to get a return on that. We should not be 
able to compete with FEMA.
    And so you step back, their plan needs to be modernized. 
Their rate plan, I have looked at it, it is not at all 
consistent with how the private sector looks at insurance, 
sells insurance, and has a rating plan. So let's start with 
that, let's modernize the program, and then let's evaluate how 
we can privatize to think about that cherry-picking aspect. 
Thank you.
    Mr. Graves of Louisiana. Thank you.
    Thank you, Mr. Chairman, for your generosity.
    Mr. Barletta. Thank you. And I think Mr. Graves made a good 
point earlier, that Congress needs to look across the Federal 
Government, including levees and flood control projects, when 
we try to bend the cost curve of disasters. The disaster cost 
study in our FEMA authorization bill should help and make such 
recommendations to Congress.
    And I also want to thank Administrator Fugate for the 
disaster deductible proposal. I don't know if it is the right 
solution, but we need a vigorous debate and innovative ideas if 
we are to drive down losses and not just shift costs between 
payers.
    And I want to thank you all for your testimony. Your 
comments today have been helpful in our discussion. If there 
are no further questions, I would ask unanimous consent that 
the record of today's hearing remain open until such time as 
our witnesses have provided answers to any questions that may 
be submitted to them in writing, and unanimous consent that the 
record remain open for 15 days for any additional comments and 
information submitted by Members or witnesses to be included in 
the record of today's hearing.
    [No response.]
    Mr. Barletta. Without objection, so ordered.
    I would like to thank our witnesses again for their 
testimony today. If no other Members have anything to add, this 
subcommittee stands adjourned.
    [Whereupon, at 11:47 a.m., the subcommittee was adjourned.]
    
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