House retreats from 2012 flood reforms

The House voted Tuesday to scale back reforms to the federal flood insurance program — a significant retreat from legislation approved two years ago.

The bill would cut pending flood insurance rate hikes for thousands of homes and businesses around the country, an idea that gained momentum among members of both parties over the last few months.

GOP leaders turned to liberal Democratic Rep. Maxine Waters (Calif.) for help in passing the legislation at a cost of turning off conservatives in their conference.

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The move paid off in the 306-91 vote that included 121 Republicans supporting it, but 86 opposing it. The bill was much more acceptable to Democrats, who approved 117-5.


The Senate passed its own bill to delay the 2012 insurance reforms earlier this year. But today's House vote could lead the Senate to accept the House bill, given the difficulty the House had negotiating the legislation over the last few weeks.


Dozens of GOP members voted against the bill and said it would make it harder to pull the National Flood Insurance Program out of billions of dollars in debt.



The 2012 changes were aimed at reversing the program's quickly increasing debt. Hurricane Katrina in 2005 and Hurricane Sandy in 2012 swamped the program, becoming major causes of the program's $24 billion debt.



To avoid having taxpayers fill this hole, the 2012 legislation called for insurance rate hikes aimed at more closely aligning the premiums collected to payments going out. Changes included matching premiums to flood risks, ending lower rates for homes with “grandfathered” status and eliminating insurance subsidies for homes once they were sold to a new owner.



But last year, new flood insurance rates were announced that were much higher than anticipated. Those changes led to complaints that owning a home or business in a flood zone was about to become unaffordable.



“In some cases, their only choice was to either spend their life savings on their flood insurance bills or walk away from their house, ruining their credit,” Rep. Shelley Moore Capito (R-W.Va.) said during Tuesday's debate.


Waters, one of the lead sponsors of the 2012 reform bill, agreed that the new rate increases were “unimaginable.”

The new bill repeals many of the 2012 law's changes and replaces them with a more moderate program for increasing insurance premiums.

It requires rates to rise an average of 5 percent per year for all flood risk categories, but caps that at 15 percent.

 That cap is also an average, but Democrats were able to negotiate language limiting individual rate hikes to 18 percent per year.

It also requires the government to work with communities as it draws up new flood maps, an attempt to give people more say in how the Federal Emergency Management Agency (FEMA) assigns flood risk to homes.


Rep. Jeb Hensarling (R-Texas), who chairs the House Financial Services Committee and told GOP leaders in a closed-door meeting that he would oppose their effort, said the bill went too far.


“The House bill before us ... would postpone actuarially sound rates for perhaps a generation,” he said. “We'd kill off a key element of risk-based pricing permanently, which is necessary if we are to ever transition to market competition.”



Hensarling added that NFIP’s main problem is that it routinely underprices flood risk, which puts taxpayers on the hook for bailing out the program any time a major flood event happens.



“If we don't protect taxpayers today, how will we ever reform the gargantuan middle-income entitlements that put us on the precipice of a debt crisis?” Hensarling asked. “I for one will vote no on this well-intended but misguided bill.”



The vote split the 32 Republicans on Hensarling's committee exactly in half — 16 voted with Hensarling, and the other 16 either voted for the bill or did not vote. Hensarling's position was backed by several conservative groups who agreed that Congress was walking away from much-needed fiscal reforms.



But most members clearly supported the bill, and it was able to draw support from Republicans with constituents affected by the possibility of rising flood insurance rates. The bipartisanship was seen in the form of many explicit “thank-yous” across the aisle during debate.



“Let me just say a word of thanks to someone very special on this, Mr. Eric Cantor, who weighed in and did everything possible to work this out in a way that we could all be comfortable with,” Waters said of the House Majority Leader.



Waters also thanked Rep. Michael Grimm (R-N.Y.), the lead sponsor of the bill who later thanked Democrats.



“I have to say a special thank you to Maxine Waters, the ranking member who worked from the beginning, my dear friend Gregory Meeks [D-N.Y.], Cedric Richmond [D-La.],” Grimm said. “This is truly a collaborative effort.”

 Grimm also thanked Cantor (R-Va.), whom he called an “absolute champion” on the bill. But while Cantor was thanked by both sides, he did not appear on the floor to debate the bill.


Rep. Earl Blumenauer (D-Ore.), who opposed the bill, predicted Congress was merely “kicking the can down the road.”



Waters agreed and said Congress needs to devote more time to figuring out how best to structure federal flood insurance.

The bill itself requires FEMA to study the issue for two years and then report to Congress on how best to continue rate hikes in a way that keeps homes and businesses affordable.

Sen. Chuck Schumer (D-N.Y.) late Tuesday indicated possible Senate support for the bill, and said the Senate would likely consider the House version soon.

"The House bill, while not as airtight as the original Senate bill, should prevent the massive increases we've all been frightened of, and put homeowners on sound footing as they live in their homes and when they want to sell them," Schumer said in a statement to The Hill. "There's light at the end of the tunnel, and we believe we will now be able to undo the worst parts of Biggert-Waters when the Senate takes up this bill in the next few weeks."

— This story was last updated at 7:47 p.m.