Should the National Flood Insurance Program be Reauthorized Through November? (S. 1182)

What is S. 1182?

(Updated February 19, 2019)

This bill was enacted on July 31, 2018

This legislation has been amended from its original form to extend the National Flood Insurance Program (NFIP), which is currently set to expire on July 31, 2018, through November 30, 2018. It wouldn’t reform the program — it's only a short-term extension. The November 30 extension is shorter than the extension through January 2019 that the Senate approved on June 28, 2018 in its version of the Farm Bill. By offering a shorter extension period for the NFIP, this amendment gives the current Congress time to enact changes to the NFIP to make it more efficient. If the NFIP were to be extended through January 2019 as the Senate has approved, the NFIP’s long-term fate would be left to the 116th Congress.

Originally this bill authorized the minting of a commemorative coin for the American Legion's 100th anniversary.

Argument in favor

There is broad consensus that the NFIP is poorly run, and Congress’s constant short-term reauthorizations of the program without addressing its managerial woes is unsustainable. This amendment puts pressure on the current Congress to address the NFIP’s issues this year.

Argument opposed

The Senate’s reauthorization of NFIP until January 2019 allows lawmakers more time to develop sound proposals for fixing the NFIP. A short-term extension to November 30 of this year is a political ploy to give the current Congress control over the NFIP’s future.

Impact

Home and property owners in flood-prone areas; Federal Emergency Management Agency (FEMA); National Flood Insurance Program (NFIP); the Senate’s farm bill; the current Congress; and the 116th Congress.

Cost of S. 1182

A CBO cost estimate for this bill is unavailable.

Additional Info

In-Depth: Sponsoring Rep. Tom MacArthur (R-NJ) introduced this bill to ensure that NFIP coverage continues uninterrupted until a long-term reauthorization can be worked out:

“Without flood insurance, mortgages are unavailable, homes cannot be bought or sold and people are left exposed to nature’s ravages. This can has been kicked down the road long enough. [NFIP’s reauthorization] must happen for the sake of 140 million Americans who live in coastal counties.”

On the issue of a long-term NFIP reauthorization, Rep. MacArthur promised to continue working with House and Senate leadership on a long-term reauthorization that “gives homeowners certainty, ensures affordability, increases mitigation funds for shore communities, and instills accountability at FEMA for how they treat disaster victims”

This bill has one cosponsor, also a Republican.

Of Note: The National Flood Insurance Program was created in 1968 to reduce the impact of flooding on private and public structures. The NFIP provides affordable flood insurance to property owners, renters, and businesses. It also encourages communities to adopt and enforce floodplain management regulations.

According to the Federal Emergency Management Agency (FEMA), which administers the NFIP, these efforts help mitigate the effects of flooding on new and improved structures. Additionally, for millions of households in the United States, the NFIP is their only source of flood insurance.

However, some argue that the NFIP is inefficient and poorly run. In its 50 years of operation, the NFIP has borrowed over $30 billion from taxpayers, and it currently operates on a $1.4 billion annual deficit. Additionally, some critics contend that the NFIP is not as innovative as it should be, given that it is a company with $1.2 trillion of insurance coverage.

Due to the NFIP’s large debt burden (it was $24.6 billion in 2017) and an imbalance between incoming premium payments and payments out to owners of flood-damaged properties, no one seriously expects the program’s financial situation to improve if it continues to be run as is. The Government Accountability Office (GAO), recognizing the NFIP’s untenable financial position, has had it on its “High Risk List” since 2006.

Over the past few years, the NFIP’s reauthorization and the terms under which the program should be extended have become a contentious issue in Congress.

The NFIP was originally set to expire on September 30, 2017, but was extended on a short-term basis to December 8, 2017. In the wake of massive storms in 2017, including hurricanes Harvey, Irma, and Maria, the House passed Congressman Sean Duffy’s (R-WI) 21st Century Floor Reform Act (H.R. 2874), a collection of seven bills that would have reauthorized the NFIP for five years, introduced private market competition, and provided programmatic reforms to help policyholders.

However, the Senate did not act on H.R. 2874, and as a result, the NFIP received a second short-term extension through December 22, 2017 and a third short-term extension through January 19, 2018. The NFIP then briefly lapsed between January 20, 2018 and January 22, 2018, before receiving a fourth short-term reauthorization through February 8, 2018. It then lapsed for eight hours during a brief government shut-down in the early morning of February 9, 2018 before receiving an extension through July 31, 2018 in the omnibus spending bill.

With the July deadline approaching, the Senate approved its version of the farm bill, including an amendment extending the NFIP for six months, on June 28, 2018. However, some in the House oppose a six-month extension because it would leave the NFIP’s fate up to the 116th Congress. Extending the NFIP until only November 30, 2018 under this amendment would maximize pressure on Congress to enact a permanent solution that makes necessary reforms and provides certainty for insurance providers and housing markets.

Media:

• Sponsoring Rep. Tom MacArthur (R-NJ) Press Release