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NATIONAL FLOOD INSURANCE REFORM ACT

OF 1993-S. 1405

TUESDAY, SEPTEMBER 14, 1993

U.S. SENATE,

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS,
SUBCOMMITTEE ON HOUSING AND URBAN AFFAIRS,

Washington, DC. The committee met at 2 p.m., in room 538 of the Dirksen Senate Office Building, Senator John F. Kerry presiding.

OPENING STATEMENT OF SENATOR JOHN F. KERRY Senator KERRY. This hearing of the Subcommittee on Housing and Urban Affairs will come to order.

I wish it were otherwise, but we seem to be presented with our own sort of Congressional disaster today, other than national disasters, and it certainly does not amount to that level, though for some, depending on what we vote on, it may well, but we have back-to-back votes, 13 of them, starting around 2:15 p.m. The first vote will be 15 minutes, and each subsequent vote is going to be 10 minutes, which means we have about 2 hours of 10-minute votes.

Obviously our capacity to conduct a hearing that is intelligible, let alone even physically able to conduct it, to get back here and ask one question and then race back is just going to be physically impossible. So we need to roll with the punch.

What I would like to do then, I just will curtail my own opening comments and take advantage of the presence of Mr. Witt who cannot be here tomorrow morning, I understand. We will just get his record testimony this morning, and I hope it is not going to cause tremendous inconvenience to others, but we would reconvene here tomorrow morning at 9 a.m. in order to try to minimize the interruptions.

Now I apologize. I know this is difficult. We just did not know, obviously, that that would be the agreement entered into late Friday afternoon; and we also did not know that there would be that many record votes required today. So I think it is probably a record of record votes, but I just do not know how to do it otherwise.

This issue of flood insurance is one that has been before us in this committee now for several years. I personally believe that the bill we have crafted represents a very fair balancing of the interests that have been presented over the course of these years.

We have tried to do our own mitigation, and I think we have succeeded in doing that. We have come up with a bill that balances the need to have sufficient enforcement mechanism and account

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ability in the taking out of insurance in order to have a fund that is sufficient to pay out, while at the same time meeting some of the other intended guidelines of the whole concept of national flood in

surance.

Clearly when you have some 11 million homes in the floodplain, only 2.6 million of which are insured, we have a serious gap. Now, with the result of what has happened in the Midwest this summer, we are already in deficit in the fund and we do not even know the full extent of the damage. That is directly contrary to what the original flood insurance concept had in mind.

We have I think shown great and appropriate sensitivity to home owners and to real estate interests. I personally believe there is nothing in this legislation that drives down any value of any existing real estate. I do not believe there is any restraint on anybody's rights with respect to property. There is only a restraint on what the Federal Government will do to insure whatever decision or choice somebody decides to make, privately. And that is as it ought to be.

The Federal Government should not be in the business of providing low-cost insurance for known risks that do not encourage some other aspect of public policy.

Within the 30-year Erosion Zone, it is clear that, knowing the rate of erosion and knowing the incipient damage that will be incurred, there is no responsibility on the part of the Government to encourage new construction in those zones. We do hold harmless existing homes. So there is no taking. No property is put at jeopardy that exists today in these areas.

There is an effort in effect to try to say: Let's go forward from where we find ourselves and be responsible in the future from this point.

I think the balance between the effort to have a responsible accountability that is not overly burdensome on banks, not overly complex and regulatory, but at the same time effective, has been put forward in this legislation.

I think there is also a significant balancing, as there ought to be, of environmental interests with the need to try to be fair to those who hold current property, but to recognize that the Federal Government's responsibility for what they choose to do with it ought not to be endless or unlimited.

So those are the guidelines. Those are the big, broad, sweeping outlines of this piece of legislation which I think, if affected, will put the Fund on sound footing and will send a signal which is appropriate to home owners and others who build in floodplains or on beaches and storm-prone damage areas of how we ought to behave in the future.

Senator we are going to try-I am curtailing my own openingwe are going to try to get Mr. Witt's comments in before we have to go over and vote. Do you have an opening that you wish to make at this time?

OPENING STATEMENT OF SENATOR LAUCH FAIRCLOTH Senator FAIRCLOTH. Well, I do.

I think the rates have been unusually low. As best I can tell, the whole program is broke. If it is not, I want someone to explain to

me where it is not broke. The claims far exceed the amount of money on hand and the amount of money coming in. So certainly the premiums need to be adjusted to some realistic figure.

But, number two, if I were going back, the Federal Government never should have gotten into the business to begin with.

I look forward to taking some closer looks at it when we have some more time.

Thank you.

Senator KERRY. Thank you very much, Senator.

Senator Sarbanes.

OPENING COMMENTS BY SENATOR PAUL S. SARBANES Senator SARBANES. I will be very brief.

First of all, I am very pleased to, as it were, turn over the hearing to Senator Kerry who has played such a very strong, positive, and constructive role in addressing this issue and has developed some legislation to be considered which I think has some very important modifications-important and positive modifications on how the program works.

Obviously we need to address this issue. It is not working well, and there is a tremendous exposure. There is inadequate money in the reserves and cash on hand, and it really raises-I mean, any rational person looking at it is obviously going to be concerned. We have a high potential of taxpayer liability. We have had a considerable noncompliance within the program that has weakened its stability.

The end result is that people who have really participated appropriately in the program may end up losing their protection because the program itself may be placed in jeopardy and the whole thing may be thrown back into a situation in which such protection is no longer available.

I think there is much in S. 1405 to recommend it.

Senator Kerry has worked hard and in a very sensitive way I think on the concerns that have been expressed in order to accommodate them. This measure encourages flood mitigation activities, provides incentives to communities to undertake flood control measures. It tries to address erosion provision so we do not simply see what is coming, and we just blindly go ahead anyhow.

There is a lot of common sense, frankly, in this bill, and there are a lot of ways in which the program has worked that does not reflect common sense.

Now we are going to have some very distinguished witnesses, and I hope to come back.

I do want to take just a moment to recognize Ms. Rebecca Quinn who is here representing the National Association of Flood Plain Managers.

She is the Flood Plain Manager from Maryland, and she has taken an active role at the national level to help shape the legislation, and she has been an effective manager of flood control programs in our State and a constructive voice in discussions with groups and individuals in Maryland who are interested in the flood program.

Again, I close by thanking Senator Kerry for the very extensive and hard work that he has put in in developing this very important piece of legislation.

Thank you, very much.

Senator KERRY. Thank you very much, Senator Sarbanes. I appreciate your help and support in it, and I thank you for those comments.

I would also personally like to thank Senator D'Amato who is not here right now, and his staff. This bill has taken tremendous leaps I think in its competency, and I appreciate Senator D'Amato's and his staff's contribution to this.

Line by line we have been working on it and trying to simplify it and clarify it, and I think we have come a long distance in doing that.

Dr. Jim Baker from NOAA is here, and we are delighted to welcome you.

Without further ado, let us go into Mr. James Witt's testimony so we can get as much in before we start this voting bonanza as

we can.

STATEMENT OF JAMES LEE WITT, DIRECTOR, FEDERAL EMERGENCY MANAGEMENT AGENCY, WASHINGTON, DC

Mr. WITT. Thank you, Mr. Chairman.

Mr. Chairman, Members of the subcommittee, it is my pleasure to appear before you today to discuss the proposed changes to the National Flood Insurance Program.

I would request that my full statement be submitted for the record, and I will summarize its contents now.

Senator KERRY. Without objection, so ordered.

Mr. WITT. Today I would like to share with you my thoughts and goals as Director of FEMA, and to talk about some of our most recent experiences in responding to the Midwest flooding, and then to discuss the changes being considered to the flood program.

When I became Director of FEMA, I committed to Congress, to the President, and to the American people to rebuild and renew FEMA.

I served the people of Arkansas for over 16 years as a local official and as the State Emergency Services Director. I saw what emergency management can do, how it can help people in times of disaster and, more importantly, how it can work with people to avoid disasters.

I believe the mission of FEMA is simple: To reduce the loss of life and property from all types of hazards by providing the leadership and support for a comprehensive all-hazard emergency management program.

Senator KERRY. Mr. Witt, could I just ask you to pull the mike a little bit closer to you there?

Mr. WITT. Sure.

Senator KERRY. Thank you.

Mr. WITT. [continuing]-a comprehensive all-hazard emergency management program which includes mitigation, preparedness, response, and recovery. The cornerstone of this mission is mitigation.

I can think of no better way to serve people than to help them avoid becoming disaster victims. Building homes and schools that

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