[Congressional Record Volume 154, Number 10 (Wednesday, January 23, 2008)]
[House]
[Pages H412-H414]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            NATIONAL FLOOD INSURANCE ACT OF 1968 AMENDMENTS

  Mr. FRANK of Massachusetts. Mr. Speaker, I move to suspend the rules 
and pass the bill (H.R. 3959) to amend the National Flood Insurance Act 
of 1968 to provide for the phase-in of actuarial rates for certain pre-
FIRM properties, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 3959

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. PHASE-IN OF ACTUARIAL RATES FOR CERTAIN PRE-FIRM 
                   PROPERTIES.

       (a) In General.--Section 1308(c) of the National Flood 
     Insurance Act of 1968 (42 U.S.C. 4015(c)) is amended--
       (1) by redesignating paragraph (2) as paragraph (3); and
       (2) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) Recently purchased pre-firm single family properties 
     used as principal residences.--Any single family property 
     that is used as a principal residence that--
       ``(A) has been constructed or substantially improved and 
     for which such construction or improvement was started, as 
     determined by the Director, before December 31, 1974, or 
     before the effective date of the initial rate map published 
     by the Director under paragraph (2) of section 1360 for the 
     area in which such property is located, whichever is later; 
     and
       ``(B) is purchased--
       ``(i) after the date of enactment of this paragraph; and
       ``(ii) for not less than $600,000.''.
       (b) Technical Amendments.--Section 1308(c) of the National 
     Flood Insurance Act of 1968 (42 U.S.C. 4015(c)) is amended--
       (1) in the matter preceding paragraph (1), by striking 
     ``the limitations provided under paragraphs (1) and (2)'' and 
     inserting ``subsection (e)''; and
       (2) in paragraph (1), by striking ``, except'' and all that 
     follows through ``subsection (e)''.
       (c) Effective Date and Transition.--
       (1) Effective date.--The amendments made by subsections (a) 
     and (b) shall apply beginning on January 1, 2011, except as 
     provided in paragraph (2) of this subsection.
       (2) Transition for properties covered by flood insurance 
     upon effective date.--
       (A) Increase of rates over time.--In the case of any 
     property described in paragraph (2) of section 1308(c) of the 
     National Flood Insurance Act of 1968, as amended by 
     subsection (a) of this section, that, as of the effective 
     date under paragraph (1) of this subsection, is covered under 
     a policy for flood insurance made available under the 
     national flood insurance program for which the chargeable 
     premium rates are less than the applicable estimated risk 
     premium rate under section 1307(a)(1) for the area in which 
     the property is located, the Director of the Federal 
     Emergency Management Agency

[[Page H413]]

     shall increase the chargeable premium rates for such property 
     over time to such applicable estimated risk premium rate 
     under section 1307(a)(1).
       (B) Annual increase.--Such increase shall be made by 
     increasing the chargeable premium rates for the property 
     (after application of any increase in the premium rates 
     otherwise applicable to such property), once during the 12-
     month period that begins upon the effective date under 
     paragraph (1) of this subsection, and once every 12 months 
     thereafter until such increase is accomplished, by 15 percent 
     (or such lesser amount as may be necessary so that the 
     chargeable rate does not exceed such applicable estimated 
     risk premium rate or to comply with subparagraph (C)). Any 
     increase in chargeable premium rates for a property pursuant 
     to this paragraph shall not be considered for purposes of the 
     limitation under section 1308(e) of such Act.
       (C) Full actuarial rates.--The provisions of paragraph (2) 
     of such section 1308(c) shall apply to such a property upon 
     the accomplishment of the increase under this paragraph and 
     thereafter.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Massachusetts (Mr. Frank) and the gentleman from New Jersey (Mr. 
Garrett) each will control 20 minutes.
  The Chair recognizes the gentleman from Massachusetts.
  Mr. FRANK of Massachusetts. Mr. Speaker, from time to time in this 
House we are asked to choose, to some extent, between the strong views 
of people concerned with excessive spending by the Federal Government 
and those interested in environmental protection. Let me say to the 
Members, today is a happier day because we bring forward a bill today 
out of the Financial Services Committee which is authored by the 
gentleman from New Jersey (Mr. Garrett), who will soon be speaking, 
which advances the legitimate concerns of both those interested in 
saving taxpayer money and those interested in environmental protection.
  We have a Federal flood insurance program that exists because of 
market failure. That is, we do not believe that if you abolish it 
altogether the private market could entirely handle this. In fact, 
there are some areas where this committee is moving, and this House has 
voted, to expand the role of Federal flood insurance, particularly in 
the area of disasters. But as we do that, it is important that we do it 
in a responsible way.
  There has been legitimate criticism of the flood insurance program as 
it was existing before. Frankly, this committee, both, again, under Mr. 
Oxley's chairmanship and recently, addressed it, and it encouraged 
people to build where they should not have built from an environmental 
standpoint and incurred too much taxpayer money. Essentially, there was 
too much subsidy in the program, from both the environmental and fiscal 
standpoints, to builders.
  In the bill that we adopted last year in the previous session, we 
began to address that. We began to charge people a more appropriate 
amount, but we did not do it fully. The gentleman from New Jersey had 
an amendment that he wanted to offer that we considered in committee, 
and we had talked about it being offered on the floor. I regret that he 
wasn't given the chance to offer it on the floor, and I gave him my 
word that we would, as soon as possible, bring it forward. And it is my 
intention, if this bill passes today, as I expect that it will, if and 
when we get to work with the United States Senate on comprehensive 
legislation, this will be a part of this. In effect, this is a delayed 
amendment to the flood insurance bill we've already passed, and it will 
be treated in any deliberations in which I am a part as if it had been 
included back then.
  So, I think the gentleman from New Jersey has done us a service by 
giving us something that is both environmentally and fiscally 
responsible.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GARRETT of New Jersey. Mr. Speaker, I yield myself such time as I 
may consume.
  First of all, I begin by saying thanks to the chairman of the 
committee for his help in working through this piece of legislation, 
and also for the ranking member for her working alongside the Chair as 
to facilitate the moving along of this legislation to the floor today. 
As the chairman indicates, we had the opportunity to discuss it in 
committee, which is, I think, and I think he will concur with me, is 
always the best way to deal with all legislation as opposed to bringing 
them up later on. It's best to get out there so we can have full and 
adequate disclosure and discussion on the issues. We were able to do 
that; we just weren't able to get it through the next hoop. But now 
we're able to jump through that hoop today, and, again, I appreciate 
the chairman's work on that.
  What this is all about, very simply, is this. Back in 1968, that is 
when NFIP was created, the National Flood Insurance Program, and that 
was done, as the chairman indicated, way back then three or four 
decades ago, as I guess more and more people were building homes in 
places maybe they shouldn't be, along coastal lines and what have you, 
it was just next to impossible to buy flood insurance.

                              {time}  1330

  So Congress stepped in and created NFIP, and that allowed folks the 
opportunity to buy flood insurance for the first time. When they did 
that, however, they realized that here again we're talking about two 
sets of houses, those that were already in existence at the time and 
those that would come afterwards, called pre-FIRM and post-FIRM homes. 
They thought Congress back then, probably in its wisdom, realized that 
it wouldn't be right to tell those folks who were already in the 
floodplains that this new program was going to come along, that they 
were going to impose upon them a mandate of buying flood insurance when 
they bought and sold their houses; so what they did was instead to 
provide a subsidy for those pre-FIRM homes, and that subsidy has 
existed up until today. Unfortunately, we know that the flood program 
has had some problems in the last couple of years, most notably because 
of Hurricane Katrina and Hurricane Rita. All the money that they have 
had to borrow to pay out for those huge flood losses, they are now $18 
billion in debt. And that's the reason why the committee is now coming 
back to relook at the flood program, and that's why we have done that.
  The legislation that the chairman talks about that we have already 
done I appreciate that we've moved through the House. I am a little bit 
disappointed, though, in that legislation in one regard, in that it 
increased the exposure to wind damage in the flood program. But despite 
that what I call an error in direction on that legislation, the 
underlying bill did make some substantial improvements to the overlying 
program. It updated the flood maps, increased the phase-in of actuarial 
rates on vacation homes and also second homes and on nonresidential 
properties that have been subsidized by the program since its 
inception.
  The one area, though, that was not addressed was these pre-FIRM homes 
and the fact that the subsidies continue to exist. So to that effort, 
we have tried to get a compromise between those who said let's not do 
anything and those who said let's have those pre-FIRM homes immediately 
put in on the higher rates that would occur without the subsidization. 
Through the committee efforts, through the work with the ranking member 
and the chairman, we were able to come through with a compromise. In 
essence it says this: If you're a pre-FIRM home, your rates will still 
be subsidized until that home is basically phased in, sold and phased 
in on the same rate schedule as the underlying bill, and only for those 
homes that are sold for over $600,000. A movement in the right 
direction with regard to the subsidization, the problems of the 
underlying program, and for that reason I think we are moving 
appropriately, and I look forward to those deliberations that we may 
have sometime with the Senate on this legislation.
  Mr. Speaker, I yield back the balance of my time.
  Mr. FRANK of Massachusetts. I thank the gentleman for his kind words.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Hodes). The question is on the motion 
offered by the gentleman from Massachusetts (Mr. Frank) that the House 
suspend the rules and pass the bill, H.R. 3959, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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