[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
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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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