Prospects brighten for flood insurance reform

By Erik Wasson - 05/16/12 01:01 PM ET

Supporters of National Flood Insurance Program (NFIP) reauthorization are increasingly hopeful they will get a five-year bill through in the coming weeks.

The program expires on May 31, and Senate Republicans and Democrats are making progress on an agreement to limit amendments on the floor to allow passage either next week or in early June, if a short-term extension is passed this month.

The House passed a reform bill last summer with 406 votes, and the Senate Banking Committee reported out a very similar bill in September. Senate Majority Leader Harry Reid (D-Nev.) has been unable to find floor time until now to consider the reform bill.

The NFIP has operated under 16 short-term extensions since 2008, injecting uncertainty into the housing market in flood-prone areas. NFIP is the sole provider of flood insurance, and any lapse would cause home sales to grind to a halt.

Last week, Senate supporters tried to get approval for a 7-month NFIP extension. The extension, sponsored by Sen. David Vitter (R-La.), could not obtain unanimous consent, however.

The House is passing a 30-day extension on Wednesday in order to keep the pressure on Congress to pass a full five-year bill, aides said. An extension through December had NFIP proponents worrying that the can would be kicked too far, into the already overcrowded lame-duck session.

Given the House move to pass a 30-day extension, a seven-month extension looks the least likely of option, aides said. A one-month extension is looking like the second most likely option, if amendments cannot be worked out.

Sen. Tom Coburn (R-Okla.) said on the floor Tuesday that he was working with colleagues to limit amendments to only a few.

A key Senate floor amendment will likely relate to extra requirements placed on homeowners in areas protected by levees, an issue pushed Sen. Mark Pryor (D-Ark.). Pryor and others oppose higher costs for homeowners already paying fees to maintain levees. The residual risk provision, as it is known, is in the Senate bill but not in the House.

House Financial Services Committee Chairman Spencer Bachus (R-Ala.) and ranking member Barney Frank (D-Mass.) teamed up on a letter to Senate leaders on Tuesday urging them to move the five-year bill. They said disagreements on minor provisions between the House and Senate versions are being worked out.