crucial opportunity for Congress to extend a hand to flood-prone communities along the Mississippi and other rivers, and to towns and cities along the Great Lakes and the ocean coasts. S. 1405 would meet an equally important goal of protecting the U.S. taxpayer from another bail-out of the financially troubled National Flood Insurance Program. S. 1405 would also help protect citizens from exposure to deadly acts of nature by withdrawing government support for development in the most hazardous area of the United States: the thin band of land-subject to hurricanes, nor'easters, storms, floods and erosion-that edges the Great Lakes and the seas. In short, S. 1405 would make the National Flood Insurance Program do what Congress intended it to 25 years ago when it created the Program.

There is no time to waste in putting the Flood Insurance Program on the right path. In the last year, nature has reminded us about the perils of building in the floodplain. The recent Mississippi River floods and Hurricane Emily, coming on the heels of last year's Hurricanes Andrew and Iniki and December nor'easter, have illustrated the danger to public safety, the huge drain on Federal financial resources, and the degradation to aquatic resources that comes with development that is too close to the water's edge.

MIDWEST FLOODS: ANOTHER FLOOD INSURANCE FUND DRAIN

The latest damage estimates from the Midwest flooding range from $10-$15 billion, with 40,000-55,000 homes and businesses affected. Some estimates from the Federal Emergency Management Agency (FEMA) indicate that as many as 80 percent of the affected buildings may have suffered "substantial damage:" that is, damage in excess of 50 percent of the building's value. Many of these buildings were inundated for long periods of time, and many are still under water, weeks after the floodwaters first arrived.

Major losses were sustained in both urban and rural areas throughout the nine States affected by the flood (Missouri, Illinois, Wisconsin, Minnesota, Iowa, South Dakota, Nebraska, Kansas and North Dakota.) FEMA currently estimates that Federal flood insurance claims will be between $50-100 million, with expenditures toward the $100 million mark more likely.

It is therefore likely that the Mississippi River floods will join other recent storms in cutting multi-million dollar swathes through the Flood Insurance Fund. This includes the 1992 December nor'easter, which generated more than $265 million in Federal flood insurance claims, and Hurricanes Andrew and Iniki, which caused over $170 million in Federal flood insurance claims. And the 1989 Hurricane Hugo sapped $352 million from the Flood Insurance Fund.

In fact, the Flood Insurance Fund has been steadily drained since Hurricane Hugo struck, dropping from $550 million in reserves in 1989, to the edge of a deficit at which the Fund stands today. It is clear that the National Flood Insurance Program is in need of immediate, serious attention. Congressional action or inaction will not stop acts of nature: rivers will continue to flood, and storms and hurricanes will continue to hit the coasts. However, Congressional action can help protect the American taxpayer, public safety and aquatic resources from exposure to hazard-prone floodplain development.

The floodplains along the Mississippi River, while not as densely populated as the Nation's coasts, have a significant number of Federal flood insurance policies in effect: roughly 38,500 in the nine States affected by the floods. As of September 7, roughly 9,300 Federal flood insurance claims already had been filed against the total number of policies in effect:

It can take three to six months for claims to be received and processed from a flood event and in the case of the Mississippi, many homes and businesses are still

under water. Therefore, it is likely that many more claims will be made against the Flood Insurance Fund in the next several months.

HURRICANE EMILY

Damage estimates from Hurricane Emily are still very preliminary, but indications are that at least $10 million in damage to Hatteras Island alone occurred. Had Emily followed a different path, or built up the force of Hurricane Andrew, the damages could have been extraordinary.

FLOOD INSURANCE REFORM INITIATIVES IN THE 102ND CONGRESS

The threat to the Flood Insurance Fund from coastal storms and riverine flooding has long been recognized. In May 1991, the House of Representatives passed by a vote of 388 to 18 legislation to reform the National Flood Insurance Program. That legislation was supported by more than 100 conservation groups, the Coastal States Organization, and the Association of State Floodplain Managers.

The legislation was the culmination of four years of examination of the Program, bipartisan leadership, and information generated during a series of 10 Congressional hearings. One of the driving forces behind the legislation was the recognition that the National Flood Insurance Program had abjectly failed to meet the landmanagement mandate Congress gave it when it was created in 1968, and that the failure to meet this mandate contributes to the Flood Insurance Fund's dangerous inadequacy. When the legislation passed the House two years ago, there was $360 million in the Flood Insurance Fund. Today, the Fund is sinking ever closer to the red.

The Federal Treasury cannot afford, the coastal and riverine environment cannot afford, and public safety cannot afford to wait any longer for action on the National Flood Insurance Program.

THE NATIONAL FLOOD INSURANCE PROGRAM'S FAILED MANDATE

In 1968, Congress acted to end the cycle of development and redevelopment in flood-prone areas by creating the National Flood Insurance Program. According to the law, written 25 years ago, "annual losses throughout the Nation from floods and mudslides are increasing at an alarming rate, largely as a result of the accelerating development of, and concentration of population in, areas of flood and mudslide hazards." The law further states that:

"the Nation cannot afford the tragic losses of life caused annually by flood occurrences, nor the increasing losses of property suffered by flood victims, most of whom are still inadequately compensated despite the provision of costly disaster relief benefits. . ."

Congress created the National Flood Insurance Program with a clear purpose:

"It is the further purpose of this chapter to (1) encourage State and local governments to make appropriate land use adjustments to constrict the development of land which is exposed to flood damage and minimize damage caused by flood losses, (2) guide the development of proposed future construction, where practicable, away from locations which are threatened by flood hazards . . . and (5) authorize continuing studies of flood hazards in order to provide for a constant reappraisal of the flood insurance program and its effect on land use requirements."

It is clear that one of the reasons the National Flood Insurance Program was created was to promote State and local land-use controls to minimize flood loss and guide development away from flood-prone areas. In essence, the Program was supposed to strike a deal: in exchange for Federal flood insurance, flood-prone communities would take measures to reduce, over time, the concentration of flood-prone structures. The sale of flood insurance policies would generate money to offset Federal disaster relief payments for flood-prone buildings already in place. And, in the long run, new construction would be sited a safe distance from the water so that disaster relief would become less and less necessary. This would benefit the Federal Treasury, help save lives, and we have subsequently discovered, protect aquatic resources from the pollution and habitat loss caused by shorefront construction.

But it hasn't worked out that way. The National Flood Insurance Program is now one of the Nation's largest domestic liabilities behind the Social Security System. It has roughly $210 billion worth of insurance in force, composed of about 2.5 million policies. And instead of discouraging coastal development, more than threequarters of the policies insure development along the marine and Great Lakes coasts.

The National Flood Insurance Program, along with the other 50 Federal programs that provide Federal funding for coastal development and redevelopment, has become an essential linchpin of shoreline construction.

FEMA's Federal Insurance Administration (FIA) admitted in a 1981 NOAA review that, "what is indisputable is that the National Flood Insurance Program has not restricted coastal development to any measurable degree."

The U.S. General Accounting Office (GAO) concluded in 1982 that the Federal Flood Insurance Program provides coastal developers with a "financial safety net" and therefore, an incentive to develop in high-risk areas.

The Department of Interior analyzed coastal development patterns from the 1940s to the mid-1980s and concluded that, “increased affluence and Federal subsidies are among the primary causes for the extensive development of our beaches in the past four decades."

More than a decade ago, the GAO recommended to Congress that it, "reconsider whether it is desirable public policy to continue providing flood insurance" along the water's edge in light of the "unavoidable potential for loss of life and destruction of property in these areas." That recommendation was made in 1982, when the verdict on the Program was already coming in from NOAA, the Department of Interior, and FEMA itself. The Flood Insurance Fund is now on the verge of bankruptcy, crippled by bills from yesterday's storms and facing a new generation of hurricanes it cannot hope to weather unless Congress acts on the GAO's 11-year-old recommendation and moves swiftly to reform the Program.

YESTERDAY'S STORMS, TOMORROW'S HURRICANES

Last year's Hurricane Andrew currently holds the title of the most expensive natural disaster in the history of the United States, far outstripping other notable tragedies, such as the 1906 San Francisco earthquake. But many hurricanes and storms have caused enormous damage and loss of life in the years leading up to Andrew. Flooding has claimed more than 21,000 lives in this century alone. Storms other than hurricanes are common to different coastal areas, and have an impact on public safety. For example, tsunamis, massive earthquake-driven tidal waves, have inundated areas of Hawaii, killing 61 people in 1960. Tsunamis have also reached California and Alaska in recent years. And seiches in the Great Lakes-storm-driven waves reaching 13.5 feet-have caused great harm in the Great Lakes area, which is the most densely populated region per shoreline mile in the United States. But a huge portion of the American population faces the threat of hurricanes. The coastal population at risk from the deadly storms has doubled from that of the 1950s and 1960s. There are now 44 million people living in hurricane-prone coastal counties from Texas to Maine.

A storm like Hurricane Andrew has been wrongly viewed by some as an anomaly. The National Hurricane Conference announced in 1992 that the Nation was beginning a new 25-year cycle of "super hurricanes," and within a year of the announcement, Hurricanes Andrew, Iniki and Emily, and the December nor'easter, struck.

The past 25 years have been relatively free of major hurricanes, according to the National Hurricane Conference, but the beginning of the new quarter-century hurricane cycle poses an enormous threat to the huge concentration of coastal development. It is important to note that the National Flood Insurance Program's entire existence has corresponded with the 25-year hurricane lull. Without immediate attention, the Fund cannot sustain another several decades of storms.

The storms that have occurred over the past several years, while not "super hurricanes," have caused enormous damage:

• On the night of August 17-18, 1983, Hurricane Alicia came ashore near Galveston, Texas, causing 3,243 injuries and 17 deaths. The price tag: $1.27 billion worth of insured losses in Texas. Of those losses, $119.1 million were spent on the more than 14,000 submitted Federal flood insurance claims.

• Not even a hurricane, but only a coastal storm, struck New Jersey and New York on March 30, 1984. Roughly $100 million was spent on New Jersey in clean-up and restoration alone.

• From August 28 to September 1, 1985, Hurricane Elena threatened Florida, prompting Pinellas County officials to evacuate all county residents. Even though the hurricane never made landfall in Florida, the cost was $200 million in damages.

• Hurricane Gloria hit mid-Atlantic and New England States on October 11-28, 1985. Almost $20 million worth of Federal flood insurance payments were made on claims from the storm, while over $70 million was spent on Federal Disaster Relief Assistance in the area.

• A coastal storm hit Maryland, Virginia and North Carolina in March 1989, with winds reaching only 47 mph. Yet the storm caused at least $4.6 million worth of property losses in Dare County, North Carolina; $800,000 in property damage in Sandbridge, Virginia; and the loss of much of the 2.5 million cubic yards of sand

that had been pumped onto the beach at Ocean City, Maryland, at a cost of $12 million. • Hurricane Hugo struck South and North Carolina, Puerto Rico and the Virgin Islands in September 1989, causing $352 million in Federal flood insurance claims. • In August 1991, Hurricane Bob hit New England. More than 2,500 Federal flood insurance claims were filed in four months, draining $40 million from the Flood Insurance Fund.

• The October/November 1991 nor'easter that struck New England and the mid-Atlantic was dubbed "ET"-the "Extra Terrestrial"-because of its monumental size and the damage it caused.

The worst storm in 30 years slammed into the mid-Atlantic coast in January 1992, chewing up at least $12 million worth of the $45 million beach replenishment that Ocean City, Maryland, had just undergone.

• Claims from Hurricane Andrew, which struck in August 1992, are still being paid. As of June 11, 1993, roughly 5,000 Federal flood insurance claims had been paid in Florida and Louisiana for damages from Hurricane Andrew, totalling about $145 million in payments.

• As of June 1993, about 335 claims had been paid for damages in Hawaii from Hurricane Iniki, totalling $25.9 million, but another 24 percent of the claims remained unpaid.

. Claims from the December 1992 nor'easter already far outstrip payments made for Hurricanes Andrew and Iniki combined. As of June 1993, the following had been paid:

• New Jersey: 11,773 claims paid, costing $148 million, with 15 percent of the claims outstanding;

New York: 6,143 claims paid, costing $77.2 million, with 15 percent of the claims outstanding;

• Massachusetts: 1,273 claims paid, costing $12.9 million, with 19 percent of the claims outstanding;

• Delaware: 41 claims paid, costing $349 thousand, with 39 percent of the claims outstanding; and,

• Connecticut: 1,617 claims paid, costing $29.9 million, with 15 percent of the claims outstanding.

• As of June 1993, claims from the March 1993 blizzard, which swept the entire Atlantic coast, totalled 3,044, costing roughly $53 million in damages. But these claims are from the States of Florida and New York alone, and 68 percent of the claims in Florida, and 61 percent of the claims in New York, remained unpaid. While storm after storm has slammed into the Nation's coasts, causing loss of life, enormous property damage, huge Federal Disaster Relief payments, and thousands of Federal flood insurance claims, FEMA has continued to make taxpayer-backed insurance available for damage in areas just hit, about to be hit or likely to be hit by storms. Congress recognized in 1968 that the coasts, and the people and structures on them, are immensely vulnerable and created the National Flood Insurance Program. But twenty-five years later, the NFIP still insures development that is a sitting duck for the next act of nature.

A TAXPAYER BAIL-OUT... AGAIN

According to an April 1992 statement by the Federal Insurance Agency, Congress appropriated $1.165 billion from the years 1981-1985 to "virtually re-establish" the National Flood Insurance Fund. Today, the Fund faces bills from the most recent round of storms ill-equipped to meet its obligations.

FEMA has stated that it doesn't plan to exceed its $1 billion borrowing authority to pay the claims from the most recent storms, but this ignores the obvious: the National Flood Insurance Program was created, in part, to encourage communities to guide development away from the water's edge so that Federal monies and human lives would be saved. That has not happened.

The Program was also created to be self-sustaining. It was not in the early 1980s, and if FEMA has to again borrow from the Treasury to pay the bills, it will not be in the early 1990s. Running-up an enormous line of credit courtesy of the Federal taxpayer is completely contrary to the purposes and objectives of the National Flood Insurance Program. It is also grossly unfair to require taxpayers who do not enjoy a house with an ocean or river view to subsidize its initial construction and poststorm reconstruction.

AMERICA'S COASTS: A THREATENED RESOURCE

The explosion of coastal development threatens not only human lives and the Federal Treasury, it threatens the coasts themselves. The Natural Resources Defense Council (NRDC) reported that in 1991, U.S. ocean and bay beaches were closed or

advisories issued against swimming on more than 2,000 occasions in the States that monitor beach water quality. The NRDC reported that high levels of bacteria-primarily from raw human sewage-are responsible for the overwhelming majority of these closures and advisories. It traced the major causes of high bacteria levels in beach water to inadequate and overloaded sewage treatment systems, Combined Sewer Overflows (CSOs), raw sewage overflows, polluted runoff, faulty septic systems and boating waste.

Shoreline development brings a heavy-and sometimes untenable-burden to the waters and beaches that line America. According to NOAA, estuarine areas are among the most densely populated and heavily used in the Nation: an estimated 45 percent of the U.S. population now lives within these areas. One of the results of this mammoth concentration of development is a degradation and destruction of the resources that drew people to the coast initially. Coastal water quality suffers from the outpouring of human wastes and runoff from city and suburban streets. Habitat is lost as construction gobbles-up beaches, dunes, islands and wetlands.

Economically important industries, other than real estate development, suffer from the paving-over of America's coasts. In 1990, the total commercial fish catch in U.S. domestic waters was 9.1 billion pounds, valued at more than $3.3 billion. Roughly 17 million marine recreational fishermen fished the Nation's waters by the mid-1980s, pumping $8.2 billion into the economy. Boating-related sales for the eight Great Lakes States topped $3 billion in 1988, and trip-related expenditures approximately doubled that figure.

But polluted waters and filled wetlands cannot support fish and shellfish, or the wildlife and economies that depend on them. On any given day, more than one-third of harvestable shellfish beds are closed because of pollution; in the Gulf of Mexico, roughly three-quarters of shellfish waters are restricted for harvest.

Commercial landings of fish and shellfish from the southeastern Atlantic and Gulf of Mexico have declined by 42 percent since 1982 because of, among other things, habitat loss and pollution.

It has been estimated that coastal wetlands may contribute $5 billion to the production of fish and shellfish in U.S. coastal waters. Yet roughly half of the Nation's coastal wetlands have already been lost, and another 55 acres disappear every day, primarily from different types of development.

Healthy coastal areas have been likened to underwater rainforests for the sheer abundance and diversity of life they support. But the health of America's coasts is on the decline. The coasts cannot tolerate the onslaught of development that has mushroomed along them: development made possible, in part, by the National Flood Insurance Program. For the national treasure that is America's coasts to survive, Congress must act to rein-in fiscally unwise and hazardous construction along the country's shores.

ENACT S. 1405 AND REFORM THE NATIONAL FLOOD INSURANCE PROGRAM

The Coast Alliance and the 85 groups on whose behalf it is testifying today strongly support S. 1405, and encourage Congress to move quickly to enact it into law.

S. 1405 would address major weaknesses in the NFIP.

S. 1405 would address major gaps and weaknesses in the National Flood Insurance Program. Among other provisions, S. 1405 would improve compliance with the Program, establish a flood and erosion mitigation grants program, protect the taxpayer from underwriting new development in eroding coastal areas, and would acknowledge the need to protect the natural and beneficial functions of floodplains. These measures, jointly and as a package, would help reduce unwise Federal expenditures, encourage less hazard-prone floodplain development and help conserve valuable natural resources along the Nation's rivers, lakes and coasts.

S. 1405 would enforce the NFIP's existing mandate, not create new ones.

S. 1405 would not create a new mandate for the National Flood Insurance Program. Rather, it would finally enforce the mandate the Program was given 25 years ago-to guide development out of the floodplain-that has been largely ignored to the detriment of the Treasury, public safety and the environment.

S. 1405 is consistent with current re-evaluation of floodplain development.

S. 1405 is consistent with the re-evaluation of floodplain development underway at several different Federal agencies in response to the Midwest floods. The Office of Management and Budget (OMB) and the White House Office on Environmental Policy (OEP) have directed the Army Corps of Engineers, FEMA, EPA, Small Business Administration, the Departments of Agriculture, Transportation, Interior, Housing and Urban Development, and other relevant agencies to pursue an overall