House struggling to find deal on flood insurance bill

House Republican leaders released a new flood insurance bill Monday that tries to find a middle ground between delaying rate hikes for thousands of homeowners and businesses, and pulling the National Flood Insurance Program (NFIP) out of its $24 billion debt.

But while the GOP is hoping to vote on the bill as early as Wednesday, the latest draft is still the subject of negotiations, and may change further before the week is through.

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Members of both parties have an interest in repealing or delaying parts of the 2012 flood insurance bill, known as the Biggert-Waters act. Members with constituents in flood zones have complained of pending rate hikes that will price them out of their homes and businesses.

The Senate responded earlier this year by passing a bill to delay flood insurance premium hikes until the government studies how affordable these increases are for thousands of homeowners and businesses, a process that could take several years. The Senate bill also eliminates language in the 2012 law that says flood insurance subsidies must end once a home is sold — many people complained that the provision is making it impossible to sell their property.

Those 2012 reforms were meant to ensure that insurance rates reflect a more realistic cost of rebuilding, and reduce the need for more taxpayer bailouts of the program.

Earlier this month, Cantor said the House bill would be a "modified" version of the bill proposed by Rep. Michael Grimm (R-N.Y.). Cantor also said the Senate flood bill went too far in removing some of the needed flood reforms in 2012.

"The Senate bill irresponsibly removes much needed reforms and imposes additional costs on taxpayers," Cantor said. "The House will act to protect the flood insurance program but also protect homeowners from unreasonable and unrealistic premium increases."

The bill introduced by GOP leaders late Friday meets Cantor's demands by repealing those pending rate hikes from 2012, which were based on flood risk, and replacing them with something closer to a standardized increase. Section 5 of the legislation, H.R. 3370, requires that within each risk category, rates must rise by an amount that is no less than 5 percent, on average.

The cap on rate hikes would be an average of 15 percent.

But some are already complaining that these hikes go too far, and may cause some of the same affordability issues that homeowners are now facing. Rep. Maxine Waters (D-Calif.) — the "Waters" on the Biggert-Waters flood bill of 2012 — said she is asking for more information about how these average rate hikes would work.

"Although there have been productive conversations with Republican leadership, I still have significant concerns that the measure will not provide the necessary relief to those facing skyrocketing flood insurance premiums," she said.

Waters said she would be discussing the bill with GOP leaders and the Federal Emergency Management Agency (FEMA), to get a better understanding of how the average rate hikes will operate. One Democratic aide said some are worried that the House bill could, for example, allow some homeowners to see a 10 percent rate hike, while others have no increase, in order to create a 5 percent average.

"We've asked FEMA for clarification as to how it deals with these average increases," the aide said. "Their response will determine whether we can support it as drafted."

This aide added that Cantor's proposal is being seen as a way to "pay for" the decision to repeal the 2012 reforms altogether, to keep the bill revenue-neutral.

But Waters stressed today that in her view, negotiations on the bill are not done, and that changes may still be made to the bill.

As of now, House Republicans have teed up the bill for work as early as Wednesday, and are planning to consider it under a suspension of House rules. That would require a two-thirds majority vote.

But if more members are skittish about the minimum rate hike language, like Waters is, it could be difficult to get that two-thirds vote.

If the House can pass it, the bill would go to the Senate, which would have to decide if it can live with the House changes, or if it will insist on its own language. The latter decision could force a House-Senate conference committee to work out the differences.

Either way, Congress looks like its on its way to passing something to moderate the 2012 reform bill. Members from both parties have heard complaints about the inability to afford some of the pending rate hikes, and House Republicans likely have an interest in helping Rep. Bill Cassidy (R-La.) in his Senate race against Sen. Mary Landrieu (D-La.) this November.