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109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    109-274

======================================================================



 
 NATIONAL FLOOD INSURANCE PROGRAM FURTHER ENHANCED BORROWING AUTHORITY 
                              ACT OF 2005

                                _______
                                

November 7, 2005.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                        [To accompany H.R. 4133]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 4133) to temporarily increase the borrowing 
authority of the Federal Emergency Management Agency for 
carrying out the national flood insurance program, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     2
Committee Consideration..........................................     2
Committee Votes..................................................     3
Committee Oversight Findings.....................................     3
Performance Goals and Objectives.................................     3
New Budget Authority, Entitlement Authority, and Tax Expenditures     3
Committee Cost Estimate..........................................     3
Congressional Budget Office Estimate.............................     3
Federal Mandates Statement.......................................     5
Advisory Committee Statement.....................................     5
Constitutional Authority Statement...............................     5
Applicability to Legislative Branch..............................     5
Section-by-Section Analysis of the Legislation...................     5
Changes in Existing Law Made by the Bill, as Reported............     5

                          Purpose and Summary

    To temporarily increase the borrowing authority of the 
Federal Emergency Management Agency for carrying out the 
national flood insurance program.
    The National Flood Insurance Program Further Enhanced 
Borrowing Authority Act of 2005 amends the National Flood 
Insurance Act of 1968, as amended by the National Flood 
Insurance Program Enhanced Borrowing Authority Act of 2005 
(Public Law 109-65; 119 Stat. 1998), to increase the borrowing 
authority of the Federal Emergency Management Agency by $5 
billion.

                  Background and Need for Legislation

    Since 1986, the National Flood Insurance Program (NFIP) has 
been financially self-supporting for the average historical 
loss year. Consistent with statute, the NFIP has borrowed from 
the U.S. Treasury during those years in which the nation 
experienced unusually high flood losses. These loans have been 
repaid to the Treasury, with interest, from policyholder 
premiums and related fees.
    National Flood Insurance Program claims liabilities arising 
from Hurricanes Katrina and Rita have been estimated at between 
$20 and $30 billion, far surpassing the total claims paid in 
the entire history of the NFIP. On September 20, 2005, the 
President signed into law the National Flood Insurance Enhanced 
Borrowing AuthorityAct of 2005 (PL 109-65), which authorized 
the NFIP to borrow up to $3.5 billion from the U.S. Treasury to pay 
claims. FEMA projects that these funds to pay NFIP claims will be 
exhausted by November 7, 2005. An additional $5 billion was requested 
by FEMA at a hearing of the Subcommittee on Housing and Community 
Opportunity on October 20, 2005, to provide sufficient funds to cover 
claims through late November and to provide time for FEMA to work with 
the Congress on NFIP reforms.

                                Hearings

    The Subcommittee on Housing and Community Opportunity held 
a hearing on October 20, 2005, on ``Management and Oversight of 
the National Flood Insurance Program''. The following witnesses 
testified:

The Honorable Richard Baker (LA)
The Honorable Gene Taylor (MS)
Mr. David I. Maurstad, Acting Director and Federal Insurance 
    Administrator, Mitigation Division, Federal Emergency 
    Management Agency, Emergency Preparedness and Response 
    Directorate, Department of Homeland Security
Mr. William O. Jenkins, Jr., Director, Homeland Security and 
    Justice, U.S. Government Accountability Office

                        Committee Consideration

    The Committee on Financial Services met in open session on 
October 27, 2005, and ordered H.R. 4133, the National Flood 
Insurance Program Further Enhanced Borrowing Authority Act of 
2005, favorably reported to the House by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken with in conjunction with the 
consideration of this legislation. An amendment offered by Mr. 
Frank, No. 1, relating to interim flood elevation requirements 
was offered and withdrawn. An amendment offered by Mr. Frank, 
No. 2, relating to emergency spending was offered and 
withdrawn. A motion by Mr. Oxley to report the bill to the 
House with a favorable recommendation was agreed to by a voice 
vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a hearing and made 
findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    The objective of this bill is temporarily increase the 
borrowing authority of the Federal Emergency Management Agency 
for the national flood insurance program to meet its 
obligations.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                  November 2, 2005.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4133, the National 
Flood Insurance Progam Further Enhanced Borrowing Authority Act 
of 2005.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Megan 
Carroll.
            Sincerely,
                                               Douglas Holtz-Eakin.
    Enclosure.

H.R. 4133--National Flood Insurance Program Further Enhanced Borrowing 
        Authority Act of 2005

    Summary: H.R. 4133 would increase the amount that the 
Federal Emergency Management Agency (FEMA) could borrow from 
the U.S. Treasury to cover expenses of the National Flood 
Insurance Program (NFIP). CBO estimates that H.R. 4133 would 
increase direct spending by $5 billion in 2006. Enacting the 
legislation would not affect revenues.
    H.R. 4133 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 4133 is shown in the following table. 
The costs of this legislation fall within budget function 450 
(community and regional development).

----------------------------------------------------------------------------------------------------------------
                                                     By fiscal year, in millions of dollars--
                                 -------------------------------------------------------------------------------
                                   2006    2007    2008    2009    2010    2011    2012    2013    2014    2015
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

Budgetary Authority.............   5,000       0       0       0       0       0       0       0       0       0
Estimated Outlays...............   5,000       0       0       0       0       0       0       0       0       0
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: Through the NFIP, FEMA offers flood 
insurance in communities that conform to the program's 
standards. Under current law, if premiums and interest income 
are insufficient to cover the program's costs, FEMA can borrow 
up to $3.5 billion from the U.S. Treasury. H.R. 4133 would 
increase the limit on FEMA's borrowing authority by $5 billion. 
Based on information from FEMA about the likely need to pay 
claims in response to recent hurricanes and the historical rate 
of claims processing for major floods, CBO estimates that the 
agency would exercise that authority in 2006, resulting in an 
increase in direct spending of $5 billion in that year.
    Current law requires FEMA to repay and borrowed funds (with 
interest) as it collects premiums, provided that the program's 
costs are fully covered; however, CBO expects that the agency 
would be unlikely to repay funds borrowed under H.R. 4133 
within the next 10 years. Assuming that NFIP premiums total 
about $2 billion a year and that losses in future years will be 
in line with the historical average (excluding losses from 
recent catastrophic hurricanes), CBO expects that repayments of 
borrowed funds to the Treasury would total about $400 million 
annually, once claims from the recent hurricanes are fully 
paid.
    According to FEMA, the agency currently estimates that 
total claims from Hurricane Katrina and Hurricane Rita will 
total about $23 billion--significantly more than the total 
resources that would be available to FEMA under H.R. 4133. 
Assuming actual costs are in line with that estimate, CBO 
expects it would take FEMA many years to finance outstanding 
claims from those hurricanes using annual income from premiums 
and that repayments of borrowed funds would not occur until 
after 2015.
    Intergovernmental and private-sector impact: H.R. 4133 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal Costs: Megan Carroll. Impact 
on State, Local, and Tribal Governments: Melissa Merrell. 
Impact on the Private Sector: Paige Paper/Bach.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section establishes the short title of the bill, the 
``National Flood Insurance Program Further Enhanced Borrowing 
Authority Act of 2005.''

Section 2. Increase in borrowing authority

    This section amends the National Flood Insurance Act of 
1968, as amended by the National Flood Insurance Program 
Enhanced Borrowing Authority Act of 2005 (Public Law 109-65; 
119 Stat. 1998), to increase the borrowing authority of the 
Federal Emergency Management Agency by $5 billion.

         Changes in Existing Law Made by the Bill, as Reported

     In compliance with clause 3(e) of rule XIII of the Rules 
of the House of Representatives, changes in existing law made 
by the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

            SECTION 1309 OF THE FLOOD INSURANCE ACT OF 1968


                               FINANCING

Sec. 1309. (a) All authority which was vested in the Housing 
and Home Finance Administrator by virtue of section 15(e) of 
the Federal Flood Insurance Act of 1956 (70 Stat. 1084) 
(pertaining to the issue of notes or other obligations or the 
Secretary of the Treasury), as amended by subsections (a) and 
(b) of section 1303 of this Act, shall be available to the 
Director for the purpose of carrying out the flood insurance 
program under this title; except that the total amount of notes 
and obligations which may be issued by the Director pursuant to 
such authority (1) without the approval of the President, may 
not exceed $500,000,000, and (2) with the approval of the 
President, may not exceed $1,500,000,000 through the date 
specified in section 1319, and $1,000,000,000 thereafter; 
except that, through September 30, 2008, clause (2) of this 
sentence shall be applied by substituting ``[$3,500,000,000] 
$8,500,000,000'' for ``$1,500,000,000''. The Director shall 
report to the Committee on Banking, Finance and Urban Affairs 
of the House of Representatives and the Committee on Banking, 
Housing, and Urban Affairs of the Senate at any time when he 
requests the approval of the President in accordance with the 
preceding sentence.

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