Getting back to some of the other issues that have been raised today and yesterday, about some of the provisions of the bill.

One of the other explicit mandates of the flood insurance program not created by environmental groups but created by Congress in 1968, when it created the program, was the following mandate: That is was the purpose of the Flood Insurance Program to encourage State and local governments in an appropriate land use adjustments to constrict the development of land exposed to hazards.

When you talk about a prohibition on new Federal flood insurance, you're talking about an activity that is directly in keeping with the tenets of the Flood Insurance Program. It would be directly complementary to the mandate and objective that Congress gave this program in 1968 when it said, this program is to help communities guide development out of the flood-prone areas. And at a minimum, it is to remove the taxpayers' involvement in development in those areas.

So a prohibition on Federal flood insurance is precisely in keeping with the major objectives of the Flood Insurance Program, which was not to make insurance expensive in hazard areas, it was to make development get out of hazard areas, so that the taxpayer would be protected, but also human lives in the recognition that people are very vulnerable to acts of nature, the closer they are to the water's edge.

Last, it's important to keep in mind, when you talk about the 30year erosion zone, I think that term can be somewhat off-putting. People can think that, boy, 30 years is several hundred miles. A 30-year erosion zone for most of the eroding beaches, for example, on the Atlantic coast, would be no longer than the length of this room. We're talking about an area that may be 50 feet or 60 feet from the water's edge. And the taxpayer is involved now in supporting construction in that area.

It's ludicrous. We're talking about a zone that if there's no Federal flood insurance available there, the city of Chicago's not going to withdraw from the Flood Insurance Program because it can't get flood insurance in an area the size of this room, nor is the city of Ocean City or Boston or any of the other shore front cities in this program. They're not going to abandon floodplain management, they're not going to run from the program.

They're going to say, well, we can't get new Federal flood insurance here. If development in that area is important enough to us, as a community, we'll make community grants. We'll deal with it as a community. But we're talking again about an area that's a small, small, small percentage of what the total shorefront community has in terms of its property area.

So in conclusion, I would just like to reiterate that the conservation community, that United Auto Workers, fishing organizations strongly support the prohibition on new Federal flood insurance in erosion zones because of the environmental benefits, yes. But also because it would help the Flood Insurance Program meet the mandate Congress gave it 25 years ago which it has abjectly failed to do, which is to guide that new construction out of these taxpayer dollar-sucking areas.

Thank you.

Senator KERRY. Thank you very much.

Kathleen.

STATEMENT OF KATHLEEN M. MCCAULEY, SECRETARY, MARSHFIELD COASTAL ADVISORY COMMITTEE, MARSHFIELD, MA Ms. MCCAULEY. Mr. Chairman, I hope you can spare 5 minutes to hear my whole testimony.

My name is Kathleen McCauley. I am testifying on behalf of the Marshfield Coastal Advisory Committee in Massachusetts. Our testimony has been endorsed by coastal resident associations from Massachusetts to Florida. I am honored to be here.

I am an appointed member of the Marshfield Coastal Advisory Committee. We are responsible for the administration of the National Flood Insurance Program's community ratings system. Our selectmen appointed our committee because 61 percent of Marshfield's tax base is in the floodplain. We support efforts to improve the National Flood Insurance Program.

We oppose S. 1405 because it establishes erosion zones that would devastate the economic base of communities all around the country. Erosion zones will immediately cause the value of real estate along the Nation's oceans, lakes, and rivers to plummet. The effect of plummeting real estate values will be the erosion of local tax bases which provide funding for schools, fire, and police.

Marshfield's Board of Selectmen are so convinced of the damage that erosion zones will have on our tax base, that they have unanimously voted a resolution opposing S. 1405. We have submitted this resolution with our written testimony.

Erosion zones will curtail new construction through denial of flood insurance. Existing homes will lose their value by being included in 30- and 60-year erosion zones. The message is, this home won't be here in 30 or 60 years.

In most cases, the message will be wrong. Only actual erosion can be measured. Future erosion or accretion, for that matter, over 30 or 60 years cannot be predicted when the weatherman can't predict next week's weather. Experts disagree on the feasibility of predicting erosion over 10 years, never mind 60. And how do you measure actual erosion?

Every flood insurance rate map references a fixed baseline reference feature. These features are medallions set in telephone poles, seawalls, or foundations. They are used to measure distances and elevations. S. 1405 does not restrict the measuring of erosion to a fixed baseline reference feature. Erosion measured from a nonfixed baseline reference feature will have homeowners and businessmen guessing, where's the erosion line today? Am I in it, or am I out of it?

Proponents of S. 1405 estimate that 70 percent of the Nation's shoreline is eroding. If their method is defective, consider the magnitude of their mistake. Errors and injustices will haunt residents. Consider the possible effect in Marshfield, MA, where 11 percent of the tax revenues are generated within 1,000 feet of our seawall. The cost of mapping and measuring erosion zones, together with grants to communities and States for mitigation, will increase the current costs of running the National Flood Insurance Program by 50 percent.

We estimate claims paid by the National Flood Insurance Program to people living on what the U.S. Army Corps of Engineers calls the "critically eroding coastline" accounted for under $8 million in losses over a 15-year period. That's about $500,000 a year. This bill would authorize the Federal Insurance Administration to spend more than $25 million over just 5 years for mapping and studies of erosion zones. That's $5 million a year. Obviously this is not a cost beneficial way to spend policyholder premiums. Erosion zones will not only hurt communities but hurt the NFIP fund.

As NFIP policyholders, we support efforts to assure the soundness of the fund. To that end, we recommend the following changes to S. 1405.

First, mortgage structures within the entire floodplain should be required to insure for flood loss. At present, only a portion of the floodplain, the special flood hazard area, falls under the mandatory flood insurance category.

This is significant because one-third of NFIP losses occur where flood insurance is not required. Unfortunately, we have seen an example of undue financial loss in the great flood of 1993. Much of this loss might have been insured if mandatory coverage had extended to the entire floodplain.

S. 1405 provides the opportunity to broaden the insurance base. If your property is in any part of the floodplain, the National Flood Insurance should be required.

Second, the definition of a "repetitive loss structure" should be expanded. In S. 1405, a property could suffer losses totalling 100 percent of the value of the structure over just 5 years, and still not meet the definition of repetitive loss. We have recommended an expanded definition in our written testimony. However, we'd like to let you know that a unique problem does exist for coastal condominium complexes that become "repetitive loss properties." In most cases, these buildings will not be able to be elevated to meet FEMA regulations, thereby losing their affordable flood insurance. The loss of affordable flood insurance for condominiums, particularly in Florida, is of particular concern to our Nation's retirees.

We support section 602 which provides for additional insurance for flood victims who must comply with expensive FEMA building regulations when rebuilding after a disaster. However, it is critical that, with this new coverage, insurance premiums remain affordable.

My husband and I are just like our friends and neighbors. We are not rich, but middle class. I am recently unemployed and despite 20 years of service, my husband must be concerned with company downsizing. Our home, the only one that we own, represents our financial security. The same is true for my parents who live two doors away, as well as my sister in Florida. The well-being of my entire family, as well as the economic strength of our communities, is dependent on the value of our homes.

I have owned my home through Hurricane Bob, the 1991 Halloween Storm, and the Blizzard of 1992. I have not suffered a flood loss. I am one of millions who pay into the fund, saving other taxpayers the cost of Federal disaster assistance. Affordable flood insurance has provided essential financial security and protection from flood disasters for me, my family, and neighbors. It has al

lowed equal access to the coast for middle class by providing affordable flood insurance. This bill will cause existing flood insurance to skyrocket, thereby pricing out the middle class to the coast.

I would ask you not to devalue our homes and destroy our local economies by passing S. 1405. It would be a shame for Congress to make changes to the National Flood Insurance Program that would result in harming the very ones it had sought to protect.

Finally, Congress can substantially improve the National Flood Insurance Program if the legislation was modified to, most importantly: Eliminate erosion zones. Expand the insurance base to include structures in the entire floodplain. Expand the repetitive loss definition. And assure that premiums remain affordable.

This concludes my testimony. We may want to supplement the record later this week.

Thank you for the opportunity to present the concerns of coastal residents and their communities.

Ms. MCCAULEY. At this time, I'd like to just highlight briefly, probably 1 minute, the testimony of Dr. Peter Fallon who represents the North Beach Civic Association in Vero Beach, FL.

Senator KERRY. Well, I can't let you do that because you've already gone over time and he's not here. But he will have his testimony made fully part of the record. And I'm not trying to avoid that. I just want to be fair to everybody. I also want to have a moment to comment, because I stayed not 5 minutes after your testimony, I stayed 10.

Ms. MCCAULEY. Thank you.

Senator KERRY. Which is double the amount of time.

Let me just comment very quickly. You did not get to the town meeting, I take it, that I held in Falmouth?

Ms. MCCAULEY. No, I did not. I had to work.

Senator KERRY. I regret that you didn't because many Marshfield residents came and they made every argument that you just made at the beginning of the meeting.

Once they understood the bill, after we had talked about it, many of them left in a total state of saying, humph, this isn't as bad as we thought it was. This is very different from what we thought it was. And I really think it's unfortunate that you weren't able to be part of that, or that we haven't had a chance to talk about it, because I really think there is a huge gap between what you described as the sort of disastrous downsides of this, and reality.

Reality is that not one of your homes is going to see an increase in a premium. You're going to probably see decreases because there will be more participants, a larger risk pool, and therefore less need to charge you as much because you're bearing the burden right now of paying for a lot of folks who aren't.

Ms. MCCAULEY. Then I misunderstood the testimony of a fellow here this morning from FEMA who said that policyholder paying $409 pre-FIRM home in an erosion zone without even including the rising cost of being in an erosion zone, would see that bill go up to $1,000 something and then once they determine the erosion zones, those bills would go up further.

Senator KERRY. They're not in the long-term properties would not go up. In the short term, it is conceivable that there would be a few properties that would see an increase, but very few, very,

very few, because there are very few properties that would fall into that kind of short-term catastrophic capacity.

Second, the mapping capacity is absolutely adequate, and we don't specify fixed point or non-fixed point. We want to leave it up to the experts in each of the States to determine what their best scientific capacity is for accurately reflecting their erosion zone. They may choose a combination of fixed point, non-fixed point.

Ms. MCCAULEY. In Massachusetts, State Coastal Zone Management has already determined that they will go to the 1978 Mean High Tide. This of course would include the blizzard of 1978, which would tend to include the most possible land, real estate and homes possible in these erosion zones. We've already looked at the maps supplied to us by Coastal Zone Management.

Senator KERRY. But they were at this meeting incidentally, and they also

Ms. MCCAULEY. I know that.

Senator KERRY. [continuing] discussed that, and they are not in fact, that is not strictly speaking the way they're going to do it.

But in addition to that, I should point out to you that what you're trying to avoid here, in a sense, is the reality of an erosion zone. I mean, you can't have a legitimate real estate market in which people are transacting where you hide the truth from people. I mean, if the reality is, this is an erosion zone and this home may or may not be here, that's disclosure. I mean that's something people have to know.

Ms. MCCAULEY. Right.

Senator KERRY. You can't hide that. You can't ask us to hide that.

Ms. MCCAULEY. I agree, Senator, and I don't think that we can justify Federal insurance for new construction in 30-year erosion zones, but how we determine those erosion zones is in question.

Senator KERRY. Right. And I think this bill sets out the most scientifically reasonable and accepted standards for determining that erosion zone.

Ms. MCCAULEY. But it's different from State to State.

Senator KERRY. Let me go a step further. In Marshfield particularly, that wall is in need of significant upkeep and repair. That is the mitigation against the erosion. If Marshfield doesn't want to take part in this, then that seawall may not become the recipient of grant money for the mitigation that comes through this premium process.

Now if all those folks down there think they're better off without having federally supported flood insurance, then maybe that's the road they want to go.

Ms. MCCAULEY. Well, unfortunately, we'd have to make the choice. What we're saying is we're not confident in how the erosion zones are going to be delineated. And you, yourself, have said that they will be appropriately and accurately designated, which means if you're in a 30-year erosion zone, that in 30 years all those houses would be gone?

Senator KERRY. Hold on one sec. You have to, first of all, I know of no house in Marshfield that to my knowledge falls into that kind of jeopardy right now. You might have one or two, but I don't know. But let me come back to this.