In a 402 to 18 May 17 vote, the U.S. House of Representatives approved H.R. 5740, a bill sponsored by Rep. Judy Biggert, R-Ill., that would extend the National Flood Insurance Program through June 30.
Dubbed the National Flood Insurance Program Extension Act, the measure seeks to avoid the massive market dislocations that would follow for the program’s 5.6 million policyholders should it be allowed to lapse. The NFIP, which has been extended 17 different times since its last long-term reauthorization expired in September 2008, is currently set to expire May 31 unless otherwise extended by Congress.
Seventeen Republicans and one Democrat (Rep. Pete Visclosky, D-Ind.) voted against the extension. Among those voting nay was Rep. Candice Miller, R-Mich., who has been perhaps the most vocal member of Congress in advocating immediate privatization of the NFIP.
In addition to extending the program, Biggert’s bill includes language that would direct federally regulated banks, Fannie Mae and Freddie Mac to accept private flood insurance as satisfying mandatory purchase requirements for federally related loans. The measure calls on the Federal Emergency Management Agency and U.S. Government Accountability Office to prepare reports on ways to privatize the flood program. It also asks that FEMA evaluate NFIP’s claims-paying ability, and how the use of private reinsurance or alternative risk transfer mechanisms would compare with its current statutory authority to borrow up to $20.75 billion from the U.S. Treasury.
All of Biggert’s tweaks are fantastic, pro-market ideas, but it’s yet not clear if this bill will be taken up in the Senate, where the clear preference has been for a “clean” extension that doesn’t change anything about the program’s current structure.
Of course, the House already passed a five-year reauthorization of the program last summer, one which includes a number of needed reforms for the NFIP, which carries a $17.775 billion debt it likely will never be able to pay off. Key among the reforms is phasing out premium subsidies that are extended to properties built before the introduction of flood insurance rate maps in the mid-1970s. These subsidized policies, estimated to be roughly 20% of all NFIP policyholders, pay only about 35% to 45% of the full-risk cost of flood insurance.
The hang-up has been in the Senate, where a similar bill was approved by the Senate Banking Committee last fall but has yet to move to the Senate floor. Sen. David Vitter, R-La., who has spearheaded efforts to push the Senate’s long-term reform bill through that chamber, also has introduced a bill that would temporarily extend the program through the end of the year.
Earlier this week, Senate Majority Leader Harry Reid, D-Nev., asked for unanimous consent on Vitter’s bill, but faced a hold-out from Sen. Tom Coburn, R-Okla., who said that he would not vote for an extension until there was a commitment from Reid to bring the reform bill to the floor. The pair have reportedly reached an agreement to bring the full reform bill to the floor, perhaps as early as next week, if Senate Republicans agree to limit themselves to “one or two” floor amendments.
“I will continue working with my friend maybe there’s some way that we can work together, figure out a way to move this forward,” Reid said. “If my friend from Oklahoma would be also make a decision on his side to have, as he indicated cogent amendments, relevant amendments we could put this in a little package and move to it without having to file cloture. So I’ll work on my side to find out what amendments there are. And if my friend can do that on Monday or Tuesday we’ll talk about this and see if we can get a very concise agreement —this is very important legislation.”
In response, Coburn said he would check with Senate Republicans on whether they could come to an agreement on how many amendments to attach to a long-term extension so that Reid would not be forced to file cloture and the legislation could pass the Senate quickly.
“I appreciate what the majority leader has said and I will work my side of the aisle to see if a possibility of moving this is there and will give it my hundred percent effort between now and next Monday when I see the majority leader to see if we can’t do it,” Coburn said.
Even if the Senate does vote on the full five-year flood bill next week, some sort of short-term extension will likely be needed, as the House and Senate will need time to reconcile the two bills. Though the two chambers are closer than they’ve been in quite some time on flood reform issues (in recent sessions, debates over adding windstorm insurance to the program and forgiving the NFIP’s debt doomed efforts to bridge the gap) there are some differences that could prove at least moderately controversial.
There are also a handful of senators who want more significant changes to the final bill. Most notable have been Sens. Thad Cochran, R-Miss., and Mark Pryor, D-Ark., who want properties that lay behind levies and other flood mitigation structures and are newly mapped into flood zones to be exempt from the guaranteed purchase requirements.
Nonetheless, it’s looking brighter than it had in recent months that the Senate could take up the full bill and pass a short-term extension, which would then be sent back to the House for action when they return May 30 from next week’s recess.