[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
CONTROLLING THE RISING COST OF FEDERAL RESPONSES TO DISASTER
=======================================================================
(114-40)
HEARING
BEFORE THE
SUBCOMMITTEE ON
ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
MAY 12, 2016
__________
Printed for the use of the
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee, ELEANOR HOLMES NORTON, District of
Vice Chair Columbia
JOHN L. MICA, Florida JERROLD NADLER, New York
FRANK A. LoBIONDO, New Jersey CORRINE BROWN, Florida
SAM GRAVES, Missouri EDDIE BERNICE JOHNSON, Texas
CANDICE S. MILLER, Michigan ELIJAH E. CUMMINGS, Maryland
DUNCAN HUNTER, California RICK LARSEN, Washington
ERIC A. ``RICK'' CRAWFORD, Arkansas MICHAEL E. CAPUANO, Massachusetts
LOU BARLETTA, Pennsylvania GRACE F. NAPOLITANO, California
BLAKE FARENTHOLD, Texas DANIEL LIPINSKI, Illinois
BOB GIBBS, Ohio STEVE COHEN, Tennessee
RICHARD L. HANNA, New York ALBIO SIRES, New Jersey
DANIEL WEBSTER, Florida DONNA F. EDWARDS, Maryland
JEFF DENHAM, California JOHN GARAMENDI, California
REID J. RIBBLE, Wisconsin ANDRE CARSON, Indiana
THOMAS MASSIE, Kentucky JANICE HAHN, California
MARK MEADOWS, North Carolina RICHARD M. NOLAN, Minnesota
SCOTT PERRY, Pennsylvania ANN KIRKPATRICK, Arizona
RODNEY DAVIS, Illinois DINA TITUS, Nevada
MARK SANFORD, South Carolina SEAN PATRICK MALONEY, New York
ROB WOODALL, Georgia ELIZABETH H. ESTY, Connecticut
TODD ROKITA, Indiana LOIS FRANKEL, Florida
JOHN KATKO, New York CHERI BUSTOS, Illinois
BRIAN BABIN, Texas JARED HUFFMAN, California
CRESENT HARDY, Nevada JULIA BROWNLEY, California
RYAN A. COSTELLO, Pennsylvania
GARRET GRAVES, Louisiana
MIMI WALTERS, California
BARBARA COMSTOCK, Virginia
CARLOS CURBELO, Florida
DAVID ROUZER, North Carolina
LEE M. ZELDIN, New York
MIKE BOST, Illinois
------
Subcommittee on Economic Development, Public Buildings, and Emergency
Management
LOU BARLETTA, Pennsylvania, Chairman
ERIC A. ``RICK'' CRAWFORD, Arkansas ANDRE CARSON, Indiana
THOMAS MASSIE, Kentucky ELEANOR HOLMES NORTON, District of
MARK MEADOWS, North Carolina Columbia
SCOTT PERRY, Pennsylvania ALBIO SIRES, New Jersey
RYAN A. COSTELLO, Pennsylvania DONNA F. EDWARDS, Maryland
BARBARA COMSTOCK, Virginia DINA TITUS, Nevada
CARLOS CURBELO, Florida PETER A. DeFAZIO, Oregon (Ex Officio)
DAVID ROUZER, North Carolina VACANCY
BILL SHUSTER, Pennsylvania (Ex Officio)
CONTENTS
Page
Summary of Subject Matter........................................ iv
TESTIMONY
Panel 1
Hon. Carlos Curbelo, a Representative in Congress from the State
of Florida..................................................... 8
Panel 2
Hon. Joseph L. Nimmich, Deputy Administrator, Federal Emergency
Management Agency.............................................. 10
Hon. Sallie Clark, Commissioner, El Paso County, Colorado, on
behalf of the National Association of Counties................. 10
Bryan Koon, Director, Florida Division of Emergency Management,
on behalf of the National Emergency Management Association..... 10
Eric Nelson, Senior Vice President of Catastrophe Risk
Management, Travelers Insurance, on behalf of the BuildStrong
Coalition...................................................... 10
Kevin Mickey, GISP, CTT, Chair, Multihazard Mitigation Council,
National Institute of Building Sciences, and Director of
Professional Development and Geospatial Education, The Polis
Center, Indiana University Purdue University Indianapolis...... 10
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Hon. Andre Carson of Indiana..................................... 37
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Hon. Carlos Curbelo \1\
Hon. Joseph L. Nimmich........................................... 41
Hon. Sallie Clark................................................ 47
Bryan Koon....................................................... 57
Eric Nelson...................................................... 65
Kevin Mickey, GISP, CTT.......................................... 73
SUBMISSIONS FOR THE RECORD
Slides referenced in the opening remarks of Hon. Lou Barletta, a Representative
in Congress from the State of Pennsylvania.....2, 3, 4, 5, 6
ADDITIONS TO THE RECORD
Press release of May 10, 2016, ``Curbelo and Sires Introduce
Disaster Mitigation Bill''..................................... 88
H.R. __, a bill to improve disaster mitigation programs, and for
other purposes................................................. 89
Letter of May 12, 2016, from Mary Ellen Sprenkel, President and
CEO, Corps Network, to Hon. Lou Barletta, Chairman, and Hon.
Andre Carson, Ranking Member, Subcommittee on Economic
Development, Public Buildings, and Emergency Management........ 106
----------
\1\ Hon. Carlos Curbelo did not submit a prepared statement for the
record.
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CONTROLLING THE RISING COST OF FEDERAL RESPONSES TO DISASTER
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THURSDAY, MAY 12, 2016
House of Representatives,
Subcommittee on Economic Development,
Public Buildings, and Emergency Management,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:10 a.m. in
room 2167, Rayburn House Office Building, Hon. Lou Barletta
(Chairman of the subcommittee) presiding.
Mr. Barletta. The subcommittee will come to order. At our
first hearing in the 114th Congress, I stated that my top
emergency management priority was pursuing life-saving and
cost-reducing disaster legislation and launching a public
policy debate about the costs of disasters, in the terms of
both the loss of property and human life.
We followed that hearing with several roundtables to help
us understand what disasters cost this country, who pays those
costs, and whether the problem is getting better or worse.
Early last year, Ranking Member Carson and I introduced the
FEMA Disaster Assistance Reform Act to call for the first
comprehensive assessment of disaster costs and losses in over
20 years. We also wanted to reform several disaster assistance
programs to make them more efficient and more effective. In
February the House passed this FEMA [Federal Emergency
Management Agency] legislation and we hope the Senate will take
up H.R. 1471 and pass it soon.
The purpose of today's hearing is to discuss what we have
learned so far and begin exploring potential solutions,
particularly the principles that should be driving those
solutions. While there are significant variations from year to
year, we have found that disaster losses have grown
considerably over the past three decades. As a result, the
private sector and Government are spending an ever increasing
amount of money on disasters. FEMA alone has obligated more
than $178 billion since 1989 for over 1,300 Presidential
disaster declarations.
In addition, the number of Federal disasters is going up.
Take a look at this graph that shows the steady increase in
the number of Presidential disaster declarations since 1953.
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Mr. Barletta. Many have suggested, including the Government
Accountability Office, that the growth in the number of
disaster declarations may be causing the increase in Federal
disaster costs. But when we had the Congressional Research
Service look more closely at the data, they found the growth in
declaration is driven by small disasters and they represent a
very small part of Federal disaster spending.
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Mr. Barletta. In fact, 75 percent of all declared disasters
account for only 7 percent of costs. In other words, we could
eliminate three-quarters of all federally declared disasters
and barely cut 7 percent of Federal disaster spending. I would
argue the amount saved by eliminating those disaster
declarations certainly would not outweigh the benefit those
declarations provide to helping our smaller, remote communities
respond to and recover from disasters.
In order to understand why disaster costs are going up, we
need to look at the big disasters, since that is where over 90
percent of the money goes. Since we started looking into this
issue, we have also found the role of the Federal Government in
covering disaster losses has increased.
As we can see here, Federal disaster spending as a share of
total disaster losses has grown from 23 percent during
Hurricane Hugo in 1989 to 80 percent during Hurricane Sandy in
2012.
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Mr. Barletta. In recent years, significant disaster aid has
been provided outside of FEMA's disaster assistance programs.
The charts show how disaster aid programs outside FEMA have
grown. In fact, for Hurricane Sandy, there was less FEMA
assistance than from either the Department of Housing and Urban
Development or the Department of Transportation. We found that
these additional disaster aid programs don't have the same
requirements and restrictions as the FEMA assistance.
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Mr. Barletta. FEMA assistance is tied to actual disaster
damage, and is for individuals, governmental entities or
certain nonprofits performing government-like functions. FEMA
only spends money on eligible items for eligible applicants, no
matter how much money FEMA receives. FEMA mitigation funds must
be used on cost-beneficial projects to ensure the Federal
investment is a wise one. FEMA makes every effort to get money
into the hands of applicants as fast as possible to enable
rapid recovery from disaster impacts.
In the most recent data provided by the Sandy Program
Management Office from March 2016, it appears that these
agencies have been slow in awarding and especially paying out
funds.
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Mr. Barletta. Based on this data, only one-third of the
CDBG-DR [Community Development Block Grant Disaster Recovery]
funds have been dispersed and only 13 percent of the FTA
[Federal Transit Administration] funds have been paid out. Now,
this may be worth looking into in greater detail, and it
certainly shows why a comprehensive look into disaster
spending, as well as costs and losses, is needed. In an era of
growing Government debt, we need to ensure Federal spending is
necessary and cost-effective.
Right after I became a Member of Congress in 2011, my own
district was hit hard by Hurricane Irene and Tropical Storm
Lee. I remember in Bloomsburg a family stayed in their home to
try to move their possessions to an upper floor. But Fishing
Creek rose too quickly. The house next to theirs was knocked
from its foundation. Water started gushing through their front
windows as they called for help. They had to be saved by a
helicopter. The woman there told me she can never live in that
home again.
I will never forget that preparing for natural disasters is
about more than the loss of possessions; it's our friends' and
neighbors' lives that could be at stake if we do not plan in
advance. As we were rebuilding, I was amazed that much of the
Federal assistance was to rebuild in the same place in the same
way, leaving people vulnerable to the next storm.
The Federal Government has a responsibility to respond
after a disaster, but we also have a duty to be good stewards
of the taxpayer dollar. I look forward to the conversations we
will have today, the ideas we are going to hear about, and
taking the next steps to reduce the costs of disasters, and I
thank you all for being here.
I ask unanimous consent that Members not on this
subcommittee be permitted to sit with the subcommittee at
today's hearing, offer testimony, and ask questions.
And with that, I now call on the ranking member of the
subcommittee, Mr. Carson, for a brief opening statement.
Mr. Carson. Thank you, Chairman. Great words. Good morning,
everyone, and welcome to today's hearing. While we have several
prominent witnesses today, I would especially like to welcome a
fellow Hoosier, Mr. Kevin Mickey, from the great Hoosier State.
Mr. Mickey is the director of The Polis Center at Indiana
University Purdue University Indianapolis. He is also the new
chair of the Multihazard Mitigation Council at the National
Institute of Building Sciences.
I look forward to my colleagues learning about the work
being done in the great Hoosier State, particularly
Indianapolis, to address rising disaster costs and losses, plus
the latest report from the Multihazard Mitigation Council.
Mr. Mickey's national leadership and his local work are
terrific examples of what Indianapolis is doing in the field of
emergency management.
I yield back, Mr. Chairman.
Mr. Barletta. Thank you, Ranking Member Carson. We will
have two panels of witnesses today. On our first panel we have
our fellow subcommittee member, Carlos Curbelo from Florida. As
someone from south Florida, Representative Curbelo knows all
too well the risks posed by natural hazards, the rising cost of
disasters, and the efforts that have proven successful in
Florida to incentivize mitigation measures and smart behaviors.
Congressman Curbelo has been a leader in this area and a great
advocate for his constituents in south Florida.
On our second panel we will be joined by the Honorable
Joseph Nimmich, the Deputy Administrator of the Federal
Emergency Management Agency, or FEMA, who has been working on
ways to reduce the cost of disasters and build resilience in
communities to avoid disaster losses.
Ms. Sallie Clark, commissioner of El Paso County, Colorado;
she is here in her capacity as president of the National
Association of Counties.
Mr. Bryan Koon, director of the Florida Division of
Emergency Management, and the president of the National
Emergency Management Association; he is here to talk with us
about his experience, as well as help us see things from a
State perspective.
Mr. Eric Nelson, senior vice president, catastrophe risk
management for the Travelers Companies, Inc., representing the
BuildStrong Coalition.
Mr. Kevin Mickey, chair of the Multihazard Mitigation
Council of the National Institute of Building Sciences.
I ask unanimous consent that our witnesses' full statements
be included in the record.
[No response.]
Mr. Barletta. Without objection, so ordered. We had hoped
that Chief David Paulison, the former Administrator of FEMA,
would be able to join us, but he had other commitments. I do
have a written statement for the record from Administrator
Paulison. I thank him and the BuildStrong Coalition for their
input on these important topics, and I ask unanimous consent
that this statement be included for the record.
[No response.]
Mr. Barletta. Without objection, so ordered.
For our witnesses here, since your written testimony has
been made a part of the record, the subcommittee would request
that you limit your oral testimony to 5 minutes.
Congressman Curbelo, you may proceed.
TESTIMONY OF HON. CARLOS CURBELO, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF FLORIDA
Mr. Curbelo. Chairman Barletta, Ranking Member Carson,
members of the committee, thank you for the opportunity to
testify before you today. This is my first time testifying
before Congress, and I am glad to do it here, at the Committee
on Transportation and Infrastructure's Subcommittee on Economic
Development, Public Buildings, and Emergency Management,
especially to discuss the important topic of disaster
mitigation. I am honored to serve with all of you.
I would like to take the opportunity to share some thoughts
on controlling the rising costs of the Federal Government when
responding to disasters. I am a native of south Florida. And my
good friend, Mr. Sires, who is working with me on this issue,
is from New Jersey. We both have a deep and personal
understanding of the devastating impacts of natural disasters
on families and communities, and have seen firsthand what
happens when homes, schools, and businesses aren't built to
withstand the forces of nature. My family and I lived through
Hurricane Andrew back in 1992. Fortunately, in my part of town,
the damage was not extreme. But just a few miles south, where
some of my family members lived, the devastation was
horrifying.
Being a Floridian, I know that we have pretty strong State
building codes already on the books. But at the national level
it is time to fix the broken Federal system that is riddled
with red tape, waste, fraud, and abuse. There is some great
work already being done in the field of pre-disaster
mitigation, and I would like to thank Chairman Barletta for
being a strong leader on the issue.
Over the last 30 years we have seen a significant increase
in federally declared natural disasters. But instead of taking
additional steps to focus more on preparing for these disasters
with enhanced building codes to make communities safer, the
Federal Government typically waits until after a disaster
occurs to react. This is incredibly dangerous and costly,
especially with the increase in extreme weather events.
According to the Weather Channel, this hurricane season is
supposed to be the most active since 2012. So this hearing and
these issues are of the utmost importance, and very timely. For
these reasons, my friend, Mr. Sires, who knows firsthand in New
Jersey just how costly cleanup is after a disaster, has
introduced legislation to work towards promoting stronger
building codes at the national level by introducing H.R. 5177,
the National Mitigation Investment Act of 2016.
This legislation works to alleviate losses to resident and
commercial property following a natural disaster through
preventative measures. It would provide incentives for the
adoption and achievement in enforcing State building codes. We
do this by allowing the President to increase mitigation
assistance following a natural disaster by 4 percent, based off
of the price of cleanup, but only if the State is enforcing
building codes. This incentive can encourage States and
localities to be proactive in future building, and also save a
lot of funds in the long run.
The bill would also create a pilot program to award grants
to State and local governments to encourage the adoption and
enforcement of nationally recognized building codes. The goals
of the grant program are to reduce disaster response and
recovery costs by increasing resilience of buildings and
reducing the amount of damage that occurs due to disaster and
chronic flooding. Grant awardees will be required to accomplish
these goals with non-Federal matching funds no less than 25
percent, and FEMA will be required to provide reports back to
Congress on the success of the program.
Mr. Chairman, the residents of both Florida and New Jersey
have had to rebuild communities after the devastating effects
of catastrophic natural disasters. Returning to a life of
normalcy is tremendously difficult, and can take many years.
Furthermore, chronic tidal flooding poses a significant threat
to real estate along our waterfront communities, especially in
my south Florida district and the constituents that Mr. Sires
represents, as well. This undoubtedly affects insurance rates,
property values, clean water supplies, and general public
welfare.
We believe that, through preemptive methods of
incentivizing State and local governments to adhere to stronger
building codes, we will alleviate the burdens and costs of the
Federal Government after a natural disaster.
I thank my friend, Mr. Sires, for working with me on this
legislation. I look forward to hearing from other experts on
the issue of disaster mitigation in the next panel. This is a
topic that requires perspectives from diverse geographical
locations and multiple industries, and I appreciate being able
to discuss my bill today. Thank you very much, Mr. Chairman.
Mr. Barletta. Thank you for your testimony, Congressman
Curbelo. I will now begin the first round of questions, limited
to 5 minutes for each Member. If there are any additional
questions following the first round, we will have additional
rounds of questions, as needed.
While we usually do not have questions for Members of
Congress, Mr. Sires is an original cosponsor of Mr. Curbelo's
legislation, and has a few questions.
Mr. Sires. I would really thank you, Mr. Chairman. I am not
going to ask Mr. Curbelo questions, because we have been
working on this for a while.
But I do want to thank you. You and I have firsthand
experience on how devastating some of these catastrophes are,
how it impacts life, how it impacts community, how it impacts
the economy. And I really want to thank you for taking a strong
lead on this. New Jersey got hit hard, Florida has been hit
hard. And I just want you to know that I think this is the way
to go, you know. Investing in mitigation, especially on a
national level, where we can put some real strong codes has
always been on my mind for many years.
So I just want to thank you for your hard work, and I look
forward to continuing, and am proud to work with you on this
legislation. Thank you very much.
Thank you, Mr. Chairman.
Mr. Barletta. Thank you. Are there any questions? Mr.
Costello? No.
Ranking Member Carson?
Mr. Carson. No, sir.
Mr. Barletta. If not, then we thank you very much for your
testimony. Your comments have been helpful to today's
discussion.
We will now call our second panel. I remind you of the
subcommittee's request to limit your oral testimony to 5
minutes. And we will give everyone the chance to be seated.
[Pause.]
Mr. Barletta. Thank you very much. Deputy Administrator
Nimmich, you may proceed.
TESTIMONY OF HON. JOSEPH L. NIMMICH, DEPUTY ADMINISTRATOR,
FEDERAL EMERGENCY MANAGEMENT AGENCY; HON. SALLIE CLARK,
COMMISSIONER, EL PASO COUNTY, COLORADO, ON BEHALF OF THE
NATIONAL ASSOCIATION OF COUNTIES; BRYAN KOON, DIRECTOR, FLORIDA
DIVISION OF EMERGENCY MANAGEMENT, ON BEHALF OF THE NATIONAL
EMERGENCY MANAGEMENT ASSOCIATION; ERIC NELSON, SENIOR VICE
PRESIDENT OF CATASTROPHE RISK MANAGEMENT, TRAVELERS INSURANCE,
ON BEHALF OF THE BUILDSTRONG COALITION; AND KEVIN MICKEY, GISP,
CTT, CHAIR, MULTIHAZARD MITIGATION COUNCIL, NATIONAL INSTITUTE
OF BUILDING SCIENCES, AND DIRECTOR OF PROFESSIONAL DEVELOPMENT
AND GEOSPATIAL EDUCATION, THE POLIS CENTER, INDIANA UNIVERSITY
PURDUE UNIVERSITY INDIANAPOLIS
Mr. Nimmich. Good morning, Chairman Barletta, Ranking
Member Carson, and the members of the subcommittee. As you
know, my name is Joe Nimmich. I am the Deputy Administrator for
the Federal Emergency Management Agency. Thank you for this
opportunity to testify about the efforts FEMA is undertaking to
reduce the rising cost of disasters.
With the continued trend towards urbanization, particularly
in large cities located in high-risk areas, and the increasing
severity of weather events, the Nation faces the potential for
ever-increasing costs in responding to and recovering from
disasters.
During a disaster response, FEMA's primary goal is to
support the survivors through effective, efficient operations.
Though FEMA has procedures in place to control costs during a
response, one of the most effective ways to reduce disaster
costs is to invest in community resilience before a disaster
strikes, thereby reducing the physical and financial and
particularly the human impacts of the event.
Preparedness and mitigation investments made before a
disaster strikes significantly lessen the financial impacts on
communities, States, and the Nation. One of the most effective
mitigation tools is establishing stringent building codes and
standards that ensure the property is built to insurable
levels. Let me repeat that: Building codes and standards that
ensure the property is built to insurable levels.
You will hear multiple times today that for every dollar
invested in mitigation, a savings of $4 is achieved, due to the
reduced impacts post-disaster. Mitigation programs reduce costs
to the American public by an estimated $3.4 billion annually.
I have to move off my prepared comments to thank this
committee and the Congress for taking action such as the post-
Sandy legislation, where we were able to move the recovery
costs forward based on assessments, but add the mitigation
costs at that time so that the building back is better and
reduces the future potential.
FEMA has made significant strides in the last few years,
bringing the larger emergency management community together
around a National Preparedness System. This provides
communities a common approach to managing the risks, and
provides communities the information, tools, and funding they
need to make informed, data-driven decisions. This is just one
step FEMA takes in promoting resilience.
The National Flood Insurance Program serves as the
foundation for the national efforts to reduce loss of property
from floods, the most costly and frequent disaster in the
United States. The program identifies areas at risk for
flooding, and makes flood insurance available to participating
communities. Within the NFIP, the Community Rating System to
incentivize communities to implement flood plain management
practices, offering lower NFIP insurance premiums to
participating communities.
Additionally, FEMA provides hazard mitigation assistance
through programs such as Pre-disaster Mitigation, Flood
Mitigation Assistance, Hazard Mitigation Grant Programs. These
provide funding to communities to implement hazard mitigation
measures pre- and post-disasters.
Programs such as the NFIP and the Community Rating System
and hazard assistance invest in community resilience before the
disaster strikes. This year FEMA went a step further,
developing the disaster deductible concept, which encourages
States, tribal, and territorial investment in resiliency
mitigation programs. I strongly believe this program will be
critical to any effort to reduce future disaster costs in a
significant way.
As you have indicated, Congressman Barletta, Congress, the
GAO [Government Accountability Office], and others have
indicated that the Federal cost of disasters continues to rise.
The solution of moving the threshold higher merely distributes
the cost differently, but does not reduce the cost of potential
disasters. With the disaster deductible concept, States would
have to meet a predetermined financial commitment, similar to
meeting an insurance deductible, as a condition of receiving
Federal funds to rebuild damaged facilities and infrastructure.
Additionally, FEMA would provide credits for those States'
investments in resiliency measures, such as adopting the
building enhanced codes or funding preparedness and mitigation
projects. Using these credits, a State's deductible could be
reduced, thereby ensuring that communities have an incentive
for investing in resilience.
During a 60-day comment period, FEMA received 150
responses. We are currently evaluating those to provide input
from the advanced notice of proposed rulemaking to develop a
proposed rulemaking for later this year. While preparedness and
mitigation efforts can help us to reduce the costs in many
areas, we must continue to acknowledge that demographic
patterns are not something we can easily or readily influence,
but we can take steps to account for these patterns by
improving building codes, promoting preparedness.
FEMA strives to invest in our Nation's resilience and
support disaster survivors, while being good stewards of the
taxpayers' dollars. We continue to look for innovative ways to
encourage risk reduction, promote preparedness and mitigation
planning, and efficiently implement the recovery programs in
order to reduce both the risks and cost to the American
taxpayer.
Thank you for this opportunity today to testify, and I look
forward to any questions the subcommittee may have.
Mr. Barletta. Thank you for your testimony, Deputy
Administrator Nimmich.
Commissioner Clark, you may proceed.
Ms. Clark. Thank you, Chairman Barletta, Ranking Member
Carson, and members of the subcommittee, for the opportunity to
testify before you today on the cost of disasters. My name is
Sallie Clark, and I am a county commissioner from El Paso
County, Colorado, and also serve as the president of National
Association of Counties, which represents all of America's
3,069 county governments.
Although all parts of Government play a role in disasters,
counties often serve as the first line of defense when a
disaster strikes, and are responsible to help our communities
recover in the aftermath. Whether it is our emergency managers
or sheriffs or 911 call centers, county hospitals, or public
health departments, or the fact that we own the majority of our
Nation's infrastructure, like roads, bridges, and airports,
Federal policy decisions regarding disasters have a major
impact on counties.
My county is no stranger to disasters, and the topic of
this hearing is personal for me. Over the past several years,
El Paso County and our surrounding areas have been devastated
by a series of wildfires and flash floods that have upended our
residents' lives, strained our local economy, and caused enough
damage to prompt four Presidential disaster declarations over a
3-year period.
Our county, which long ago inspired Katharine Lee Bates to
write the famous hymn, ``America the Beautiful,'' is now home
to charred, barren hillsides. And the vegetation that once
protected the area from stormwater runoff has disappeared,
paving the way for dangerous flash floods.
But we have been working diligently to help our community
recover and become more resilient in the future. Today I
respectfully submit three principles for your consideration, as
you continue to discuss Federal disaster spending.
First, Federal disaster spending should be viewed in the
context of corresponding spending by State and local
governments and the capacity of each level to fund disaster
recovery efforts. Thousands of disasters strike our Nation each
year, and the vast majority of long-term recovery costs are
carried on the backs of State and local governments.
According to NACo's [National Association of Counties']
analysis of FEMA data, over the last 10 years 92 percent of
counties across the Nation had at least one FEMA-declared
disaster. And according to materials published by FEMA, the
number of disasters successfully handled without request for
Federal assistance is estimated at 3,500 to 3,700 annually,
while only about 35 disasters per year received major
declarations triggering Federal assistance between 1953 and
2014.
Furthermore, it is important to consider the respective
fiscal capacity of Federal, State, and local governments when
assessing contributions to our Nation's recovery from
disasters. County governments in more than 40 States operate
under restrictive revenue constraints imposed by State
policies, including caps on property taxation that limit
counties' ability to raise additional funds in the face of
rising disaster costs. Local governments spend significantly on
disasters. And changes to Federal disaster spending should not
be assessed without consideration of this.
Second, decreases in Federal disaster spending should not
come at the expense of State and local governments. The
ultimate result of shifting Federal disaster costs to State and
local governments will further deplete resources available for
proactive disaster mitigation and resiliency work, resulting in
even costlier disasters in the future.
FEMA's disaster deductible proposal presents some serious
challenges for local governments. For example, El Paso County
has spent many millions of dollars on mitigation projects in
the last several years, as we have worked to recover from the
wildfires and flash floods that have ravaged our community,
including loss of life. But under the disaster deductible
proposal, if the State of Colorado fails to sufficiently invest
in mitigation efforts, public assistance funds could be
withheld from our county at times when we are in most need of
Federal assistance.
In this way we could be punished because of the inaction of
an entity over which we have no control, despite our best
efforts in mitigation. And this is just one of the many issues
with this proposal that thus far have not been sufficiently
addressed.
Because of this, FEMA has not given local governments
confidence that a disaster deductible could be implemented
without the significant risk that it would simply shift
disaster costs from the Federal Government to State and local
governments.
And finally, local disaster mitigation efforts bring down
the overall cost of disasters, and should be supported by the
Federal Government. Counties are uniquely positioned to
implement mitigation efforts through our regulatory authorities
and convening powers. Collaboration with the Federal Government
helps counties better utilize our authorities and resources to
mitigate the damage caused by disasters, increasing community
resiliency, and decreasing impact and cost of future disasters
for all levels of Government.
FEMA's Hazard Mitigation Grant Program and the other
Federal programs enable counties to undertake large mitigation
projects that may otherwise be out of their reach and have
tremendous potential to drive down the cost of disasters for
all levels of Government.
Mr. Chairman, Ranking Member Carson, and members of the
subcommittee, I want to thank you again for inviting the local
perspective on this important conversation. And I would welcome
any questions.
Mr. Barletta. Thank you for your testimony, Ms. Clark.
Mr. Koon, you may proceed.
Mr. Koon. Thank you, Mr. Chairman, Ranking Member, and
members of the subcommittee. My name is Bryan Koon, and I am
the director of the Florida Division of Emergency Management. I
am here on behalf of the National Emergency Management
Association, which represents the State emergency management
directors of the 50 States, territories, and the District of
Columbia.
As the frequency, intensity, and variability of disasters
increase, it is imperative to reduce risk wherever possible.
This will ensure that our scarce personnel and financial
resources are focused on life safety, and those aspects of the
built environment where the risk cannot be reduced.
NEMA believes the following. Meaningful cost reduction
should impact all levels of Government and the private sector,
and not simply shift the cost between stakeholders. The
Government practice of spending more money on disaster recovery
than risk reduction must be changed. Hazard mitigation is a
cost-effective effort with a documented return on investment.
Mitigation reduces response costs and speeds recovery.
Integrating mitigation meaningfully into recovery can be the
catalyst for a communitywide focus on preparedness in the
future.
Mitigation and resilience activities by State, local, and
tribal governments should be recognized and incentivized by the
Federal Government. In the long term, cost savings will be
realized at all levels.
Much of the legal authority and responsibility for risk
reduction decisions and activities resides at the local level,
such as adoption and enforcement of building codes, zoning, and
land use decisions. Local and tribal governments are critical
partners in creating and sustaining disaster-resilient
communities, and must be engaged in this conversation.
All stakeholders must utilize the best available science
and predictive analysis tools to illustrate data-driven result
on investment calculations. This can only be done when data is
made available to all stakeholders, and when calculations are
not done in a vacuum. We must leverage data to support our risk
reduction priorities.
At the urging of Congress, FEMA has undertaken various
efforts over the last decades to reduce cost and streamline
operations. Reengineering of the Public Assistance Program is
an excellent example of FEMA working to improve and maximize
existing programs. While it is still too early to determine the
effectiveness of the change, we are pleased with the effort,
and urge that similar reforms be considered in other Federal
programs.
Investment into the Emergency Management Assistance
Compact, or EMAC, leverages Federal grant dollars that have
already been invested in State and local emergency management
programs. We must encourage greater investments, as States work
with one another to reduce the need for Federal assistance,
Federal administrative costs, property damage, and, most
importantly, save lives.
In January, FEMA proposed a concept to create a State
deductible for federally declared disasters. While there was no
consensus opinion among the States, many expressed these common
beliefs about any new proposal: the concept should drive real
reduction in costs at all levels, and not merely a shift in
costs; an appropriate amount of time must be given to ensure
successful implementation, including internal education for
FEMA, and training and guidance for States; States must also be
given adequate time to ensure that any budgeting requirements
are understood and acted upon by State legislatures; the
proposal should utilize the opportunity to decrease
administrative burden and associated costs; and the deductible
cannot result in delayed assistance to those in need.
Regardless of what happens with the disaster deductible or
any other current initiative, real progress will be achieved
when all critical stakeholders are engaged. I would like to
wrap up with a few thoughts on where we go next.
The Federal Government should continue to offer incentive
programs that allow States to pursue innovative ways to
strengthen their communities. We recommend FEMA and other
agencies continually evaluate these programs to better
understand the things that deter or prevent communities from
fully leveraging these opportunities.
NEMA also recommends that a study to determine the true
cost of disasters be conducted that captures not only those
direct financial costs borne by FEMA, but also those costs,
both direct and indirect, that are paid by other Federal
agencies, State, local, and tribal governments, and the private
sector.
Position FEMA as a partner in developing a more resilient
Nation. FEMA's focus must transcend response and the agency
must make advancements in all phases of the disaster cycle.
Mitigation and long-term recovery are societal investments, not
a cost.
Many of the functions that FEMA fulfills during a disaster
could be done in a more cost-effective manner by using
personnel deployed from tribal, State, or local government
through EMAC. Invest in the infrastructure necessary to achieve
this goal.
In addition to improving currently existing Federal
programs, FEMA and others should recognize outstanding efforts
done by State and local entities and encourage their adoption,
nationwide. While many stakeholders approach the issue of
increasing disaster costs differently, we all have a common
goal. As Government officials, private-sector business leaders,
and community members, we all have a role to play in reducing
the cost and impact of disasters.
I appreciate the opportunity to testify before you today
and stand ready to answer any questions the committee may have.
Mr. Barletta. Thank you for your testimony, Mr. Koon.
Mr. Nelson, you may proceed.
Mr. Nelson. Good morning. Chairman Barletta, Ranking Member
Carson, and members of the subcommittee, thank you for holding
this important hearing today to examine solutions to
controlling the increased costs of natural disasters. My name
is Eric Nelson, and I am senior vice president of catastrophe
risk management at Travelers Insurance. I am testifying today
on behalf of the BuildStrong Coalition, a group of businesses
and consumer organizations dedicated to reducing human and
economic losses from natural disasters.
As one of the largest property casualty companies in the
U.S., Travelers provides a unique private-sector expertise that
can add value to the Federal Government's mission to manage its
own risk and losses from natural disasters.
I would first like to thank Chairman Barletta and the
members of the subcommittee for their continued leadership in
conducting a series of roundtables on this topic beginning in
January of last year. I begin today by outlining three major
takeaways from those roundtables. And before I do that--that
is--the main question we want to ask ourselves is what
actionable steps can Congress take to mitigate risk, lessen the
impact of families and communities across America, and reduce
Federal losses from natural disasters?
The first takeaway from the roundtables is that, by almost
every measure, Federal disaster spending is increasing on an
unsustainable path. Dr. Erwann Michel-Kerjan from Wharton
showed that Federal cost-share of natural disasters exploded
over the last 60 years, increasing from roughly 6 percent in
1955 to 77 percent in 2015.
The second takeaway from the roundtable is that the States,
communities, and individuals have little incentive to undertake
loss prevention measures before a disaster occurs. We are going
to hear in a minute the Multihazard Mitigation Council
conducted a study documenting how every dollar spent on
mitigation saves the Nation approximately $4 in post-disaster
relief costs. A new study by Wharton indicated that a $1
increase in the Individual Assistance grant program reduces
disaster insurance demand by $6. These findings represent
compelling evidence that the Federal Government is
inadvertently fostering short-sighted behavior throughout State
and local governments and with individual homeowners.
The third point from the roundtable is that eliminating
disincentives and replacing them with the appropriate
incentives for mitigation can benefit all parties involved. The
Federal Government would benefit by lowering its cost share for
disaster assistance. States would benefit by alleviating the
budget constraint caused by disasters, and easing their
dependency on Federal aid. Families would benefit by reducing
personal disaster costs and protecting loved ones. Communities
and local economies would benefit by enabling citizens and
businesses to recover more quickly after an event.
While the benefits are clear, the question remains: What
specific actions can Congress take?
The National Mitigation Investment Strategy is based on the
latest science and engineering research from world-class
research institutions, such as the Insurance Institute for
Business and Home Safety, or IBHS. IBHS and other research
institutions conduct research on building performance standards
and simulated disaster conditions and controlled environments.
Research from these institutions demonstrates that statewide
adoption and enforcement of building codes can reduce long-term
risk. Studies conducted in the wake of major disasters also
support this finding.
Another fact. According to IBHS, at least 25 percent of all
businesses that close down for 24 hours or more during a
disaster never reopen. That is staggering stats. And think
about the businesses and the jobs.
Another stat we looked at was the LSU [Louisiana State
University] Hurricane Center estimated that stronger building
codes would have reduced wind damage in Hurricane Katrina by 80
percent, or $8 billion.
So thank you for your leadership, Congressman Curbelo and
Congressman Sires. I am pleased to report that the core
principles from this report have been turned into legislation
and introduced in H.R. 5177, the National Mitigation Investment
Act. This act provides a powerful incentive for States to adopt
and enforce statewide building codes and authorize a first-of-
its-kind competitive grant program to improve building code
enforcement.
Further, the legislation includes a provision authorized by
the chairman in H.R. 1471, authorizing Congress to look at the
first comprehensive assessment of Federal disaster spending by
Congress in over 20 years. Congressional leaders, policy
experts, and GAO all agree strong building codes, and enhanced
pre-disaster mitigation would provide life and cost-saving
benefits.
I urge you and your colleagues to support the National
Mitigation Investment Act in order to rein in Federal
Government's exploding costs. Chairman Barletta, Ranking Member
Carson, and the subcommittee, I applaud you for your efforts,
and thank you for taking up this issue. I would be happy to
answer any questions.
Mr. Barletta. Thank you for your testimony, Mr. Nelson.
Mr. Mickey, please proceed.
Mr. Mickey. Chairman Barletta, Ranking Member Carson, and
members of the subcommittee, thank you for the opportunity to
provide testimony on approaches for reducing the cost of
natural disasters. My name is Kevin Mickey, director of
professional development and geospatial education at The Polis
Center at Indiana University Purdue University Indianapolis,
which has the mission of linking academic and community
expertise to create strong and resilient communities.
I am here today as the chairman of the Multihazard
Mitigation Council of the National Institute of Building
Sciences, introducing a new and unique approach we have
proposed for the incentivization of private property owners
throughout the United States.
The United States Congress established the National
Institute of Building Sciences in 1974 to serve as an
authoritative source for both the public and private sectors to
improve the built environment. To achieve its mission, the
institute has established 18 councils that engage building
industry experts in examining and developing tools,
technologies, and practices to meet identified needs. The
institute and its Multihazard Mitigation Council, or MMC, and
Council on Finance, Insurance, and Real Estate [CFIRE] have
been particularly focused on opportunities to advance
resilience and encourage the most cost-effective approaches to
reducing the impacts of natural, as well as man-made,
disasters.
As you are aware, there have been numerous efforts at
developing increased building codes and standards, mitigation
programs, scientific studies of best practices, and definitions
of resilience. And yet we continue to find that the penetration
of hazard mitigation into the private sector is spotty and
woefully incomplete.
Now, this is not to say that these efforts have not been
effective. As has already been pointed out, a 2005 MMC study
showed that implemented mitigation strategies do indeed save on
the order of $4 for every $1 spent. And currently, the
institute is discussing with Federal agencies and the private
sector a project to revisit this 2005 study and expand it to
consider all Federal programs, the role of model building
codes, and the benefits that mitigation provides to the private
sector.
Recognizing the significant benefits achieved through
proactive investments in mitigation, the limited funding
available to support disaster mitigation response and recovery,
as well as the anticipated increase in disaster events, a new
approach is necessary.
The most cost-effective manner to achieve resilience is
through a holistic and integrated set of public, private, and
hybrid programs that capture opportunities available through
investment and mortgages and equity real estate, insurance,
finance, tax incentives and credits, grants, regulations, and
enhanced building codes and their application. This focus on
leveraging private-public sector opportunities to induce
corrective action is called incentivization.
The incentivization approach calls for input, consensus,
leadership, and action from a broad spectrum of stakeholders
representing the financial, regulatory, and economic processes
that need to be developed and coordinated to make
incentivization part of the Nation's economic fabric.
Participants should include those who offer incentives such as
insurance and finance-related companies, lenders, and
foundations, as well as forward-thinking communities and
Government agencies and important decisionmakers that most
definitely need to include homeowners, businesses, and
utilities.
The MMC and CFIRE jointly published and developed a white
paper entitled, ``Developing Pre-Disaster Resilience Based on
Public and Private Incentivization,'' which provides a catalog
of existing programs for different hazards that private and
public sector stakeholders can evaluate and then modify or
expand to develop incentives. The specifics of incentivization
need to be tailored for new and existing construction, using
optimal resilience measures beyond current law or custom, and
to account for hazard risk, locality, business size, and the
value of resilient strategies. One size cannot fit all.
Incentivizing the means to achieve resilience before
disasters occur focuses on monetizing the benefits for
incorporating risk mitigation practices in the ordinary course
of business. Participating stakeholders need sufficient
confidence that using incentives to achieve resilience will
justify investments, underwriting, and loan and grant programs.
The private sector will not undertake resilience investments
just because it is sensible, but because it is economically
prudent.
While my written testimony describes many opportunities for
congressional action, I offer a few specific recommendations
here.
First, every Federal dollar associated with construction,
community development, and infrastructure must include a
requirement that the latest building codes be met or exceeded.
Second, Congress and Federal agencies should examine all
programs, particularly grant-making programs, to identify
opportunities to support resilience.
And finally, Federal investments and programs should
require investment in mitigation.
Thank you for the opportunity to testify before you today.
Please consider The Polis Center, as well as the National
Institute of Building Sciences as resources as you look to
address challenges related to the built environment.
I look forward to your questions.
Mr. Barletta. Thank you for your testimony, Mr. Mickey.
I will now begin the first round of questions, limited to 5
minutes for each Member. If there are additional questions
following the first round, we will have additional rounds of
questions, as needed.
Deputy Administrator Nimmich, why are the big disasters
costing so much money now, and what factors do you think are
driving this change?
And then I would also like to hear Mr. Koon and Mr.
Nelson's thoughts on that.
Mr. Nimmich. Congressman Barletta, I think the biggest
challenge is the continued movement of populations into high
urban areas that happen to have been developed from historic
perspectives in very dangerous areas along our rivers for
flooding, along our coastlines for major storms, and on
earthquake faults. The reality of people moving to the cities
is one that we are going to face for the foreseeable future,
and that only increases the potential of costs.
Additionally, the value of property has gone up
substantially over time. And therefore, the recovery costs
continue to go up. What it cost to build a mile of roads 30
years ago is very different than what it takes to build a mile
of roads today. The only solution is, in fact, building for
those future States that we look at, in terms of culverts that
can maintain the flow of water, bridges that are better
maintained, all of the infrastructure that needs to be there,
as well as public buildings built to standards that allow for
the potential of future disasters to be minimized.
Mr. Barletta. Mr. Koon, Mr. Nelson?
Mr. Nelson. Yes. Just to add to that, the wealth effect
that has happened in America since the 1970s, clearly, the
average home size has increased by about 1,000 square feet.
Echoing the comment more and more Americans moving to areas
that have higher risk, but adding on top of that--we see it in
our statistics--if you are growing in an area with poor
building codes versus good building codes, we see it in the
claims data, we see it--where we shouldn't be seeing claims we
see claims at low wind speeds, at small hail sizes. There is a
better way forward, and we see it for States like Florida that
have had very good adoption of building codes. There are proven
studies that have shown how much it has benefitted. So just to
add that to the conversation.
Mr. Barletta. Mr. Koon?
Mr. Koon. Thank you, Mr. Chairman. I concur with both Mr.
Nimmich and Mr. Nelson.
I would also add I believe that, over time, there has been
a better understanding and better utilization of the funding
that is available to communities after those types of
disasters. And so perhaps we are fully recognizing all of the
ways that we can use those Federal, State, and local dollars to
help the community recover.
I believe there is also probably an additional cost on the
administrative oversight of those programs, and the program
requirements to effect the recovery and subsequent mitigation.
Those recovery programs can often stretch into the decades for
some of our larger disasters. And so the administrative costs
associated with those also add to those higher costs.
Mr. Barletta. Deputy Administrator Nimmich, we continue to
see new disaster aid programs emerge ad hoc in reaction to
disasters. They all seem to have different rules and
requirements and do not seem well coordinated or focused on
obtaining the best outcomes.
Don't FEMA programs contain strict requirements on
eligibility, use, and cost effectiveness? And are you aware if
other agency disaster programs include such requirements? And
is this something that Congress should take a look at, so that
we can streamline these programs and ensure that they are cost
effective?
Mr. Nimmich. Congressman Barletta, you are absolutely
correct that we have very stringent codes and requirements in
order to qualify for Federal dollars. And, as Mr. Koon pointed
out, they often take a great deal of oversight to ensure that
they are effectively and correctly implemented.
I can speak through the Sandy legislation, that there was a
requirement to capture all of the different agencies, including
HUD [U.S. Department of Housing and Urban Development] and
Federal Transit Administration, to ensure we had a more
complete understanding of where the different investments in
recovery were going. That is not consistent across all of the
different disasters that exist.
I will tell you that this year, for the first time, the
administration passed the Federal Flood Risk Management
Standards that require every agency, for every Federal dollar
that is invested in recovery, to meet a standard for the first
time. That includes the Department of Defense, as well as all
the other agencies. So there are activities going on to try to
ensure that we all build to a high standard. But the capture of
those costs is not something that we currently do.
Mr. Barletta. Now I recognize Ranking Member Carson for 5
minutes.
Mr. Carson. Thank you, Chairman.
Mr. Mickey, in terms of community buy-in, various reports
have been released about the rising costs of disaster, benefits
of mitigation and the need to take steps to mitigate for
disasters. So Congress has also acted to incentivize
mitigation.
So, for example, Congress authorized FEMA to provide
additional Hazard Mitigation Grant Program funding to States
with enhanced plans, yet only 12 States have adopted these. So,
even with incentives, it is very difficult to get States to
take action.
How do we get the ideas in your report to the public and
private sectors, and what is needed to actually get ideas
implemented?
Mr. Mickey. Well, I am happy to say that we have already
taken some steps in that direction. Just this past January, the
institute held a symposium here, in Washington, DC. That
institute brought together experts in the industries that I
identified in my testimony for the purpose of discussing
exactly what was presented and, more importantly, to share
their own ideas for how to incentivize resilience in their
respective sectors.
The next step that the institute is currently pursuing is
to develop a stakeholder leadership council that consists of
the leaders of the various stakeholder groups to include
insurance, loan organizations, bond writing organizations,
businesses, utilities, homeowners, and, of course, local, State
and Federal Government. The goal of that council is going to be
to work on formulating the mechanisms for incentivization.
The idea that we have is that, by getting the buy-in of
these stakeholders directly--because they will be the ones
coming up with these incentive strategies--that others will
then follow. And they are going to be incentivized to help
build an enhanced economy that does not currently exist for
writing insurance, originating loans and bonds, and generating
construction activity.
Ultimately, the goal, as we see it, is to produce a set of
products that consumers want. Let me give you a couple of
examples that you will find in our full study.
State Farm Insurance offered a premium discount in Texas
for installation of impact-resistant roofs. The result was that
products related to impact-resistant roofs went from 10 in 1998
to more than 1,000 in the year 2003. And that program has now
expanded out into 26 additional States. According to State Farm
Homeowners, the IRR product, or the impact-resistant roof
product, is something that they now want.
And then, just earlier this week in Washington, the mayor
of the city of Fairhope, Alabama, Tim Kant, was attending the
Resilience Building Codes Forum, and he made a statement that
his community is now considered one of the most desirable
places to live, specifically because their homes are recognized
as being more resilient. And that community is one of the
places where the fortified program is found.
The institute is planning to serve the role of identifying
these solutions that I have mentioned. We recognize that there
are plenty of best practices out there. What we want to do is
bring together the stakeholders to identify those best
practices and see them replicated across the industry. We
recognize that costs are high, and we are looking for ways to
reduce them, and we believe this is a creative approach.
Ultimately, we believe that activities such as implementing
building codes need to be started to be viewed as a carrot, not
as a stick. And if the incentives are appropriate, we think
that can happen.
Mr. Carson. Thank you.
Mr. Koon, you have mentioned FEMA's new customer service-
centric focus for the Public Assistance Program as a positive
step forward. Are there other actions FEMA could take with
respect to the Public Assistance Program in order to reduce
disaster costs and even losses?
Mr. Koon. Thank you, Ranking Member Carson. I believe that
continued implementation of some of the procedures that were
highlighted in the Sandy Recovery Improvement Act in ways that
will help us expedite funding to the locals could result in
cost savings and improved recovery, as we move forward.
We are eager to continue to work with FEMA on this PA
[public assistance] reengineering process, to make sure that
they are as customer-centric as possible in this situation, so
that we can help, again, get those communities back up on their
feet as quickly as possible, at a minimal cost to the Federal
Government.
With regards to the question you asked Mr. Mickey earlier,
with regard to incentives, if I may, we have done a very good
job on providing incentives for programs. You mentioned the
enhanced mitigation program, there are incentives offered
through the National Flood Insurance Program, Community Rating
System, there are incentives offered through the Sandy Recovery
Improvement Act for debris removal. None of those, I believe,
have fully met what they intended to do.
And so, continual reevaluation of those incentive programs
to determine why they are not being taken up at the level we
anticipate would be necessary, and then go back and improve the
processes by which we implement those programs, would help them
meet the maximum good they were designed to--intended to
effect.
Mr. Carson. Thank you. And Administrator Nimmich, earlier
this week the White House hosted a conference on resilient
building codes. Included in the fact sheet issued by the White
House it stated that FEMA is developing a more detailed plan to
be put forth for additional public discussion in a notice of
proposed rulemaking.
Has FEMA finished reviewing all the comments and arrived at
determining that it will definitely go forward with rulemaking
on disaster deductible concepts, if so?
When can Congress and stakeholders expect the proposed rule
to even be issued?
Mr. Nimmich. Representative Carson, thank you for the
question. The deductible process has been one where we have
reached out heavily to the user group. And, as Ms. Clark
indicated, we have received over 150 very detailed responses to
the advanced notice of proposed rulemaking. And we went through
the advanced notice of a rulemaking process in order to get
that type of feedback that Ms. Clark indicated, where there are
concerns that this might just be the ability to transfer costs
from the Federal Government to State and then to local
communities.
The intent here is exactly what we have been talking about,
to incentivize and make more consistent the ability for
communities to invest in mitigation and preparedness
capabilities. We are now going through those 150 comments to be
able to come up with an actual proposed rule that will have
details in it that we will then go out through the proposed
rulemaking process to get specific comments back on those
rules. We anticipate that that will be out some time this
calendar year, sir.
Mr. Carson. Thank you. And I don't know where we are on
time, Mr. Chairman, but I yield back.
Mr. Barletta. Thank you, Ranking Member Carson.
Mr. Graves, you have 5 minutes.
Mr. Graves of Louisiana. Thank you, Mr. Chairman.
Administrator Nimmich, who is in charge within the Federal
Government of our national efforts in terms of community
resilience? Which agency?
Mr. Nimmich. So, as you would expect, Congressman, FEMA,
through the National Preparedness Program, provides the
guidance for the Federal Government to be able to assist State
and locals in developing their preparedness programs. And FEMA,
working with the States through their threat estimating
program, as well as their preparedness reports, captures that
information, as well as for the Federal Government----
Mr. Graves of Louisiana. OK.
Mr. Nimmich [continuing]. But each agency themselves are
responsible for their support to the preparedness plan.
Mr. Graves of Louisiana. Got it. Administrator Nimmich, do
you acknowledge the statistics that Mr. Nelson referenced in
regard to studies indicating that proactive investments in
hazard mitigation generate cost savings?
Mr. Nimmich. Yes, sir. I said it in my opening statement,
and that is what the deductible----
Mr. Graves of Louisiana. Great.
Mr. Nimmich [continuing]. Process is trying to----
Mr. Graves of Louisiana. Thank you. Do you see any of the
work of the U.S. Army Corps of Engineers as being efforts to
reduce hazards or address mitigation strategies?
Mr. Nimmich. Sir, we work closely with the Army Corps of
Engineers, and----
Mr. Graves of Louisiana. If you could just--if you don't
mind, just a yes or no. I would appreciate----
Mr. Nimmich. Sir, I am not comfortable answering just a yes
or no, but would do so for the record. We work very closely
with the Army Corps of Engineers, and I do believe that an
awful lot of their efforts go to reducing the impacts of
potential future disasters. In North Dakota, they have worked
very closely with the city of Fargo to be able to develop----
Mr. Graves of Louisiana. All right.
Mr. Nimmich [continuing]. Capabilities----
Mr. Graves of Louisiana. Thank you. I will go ahead and
answer these so I don't burn through all the time.
So you have the U.S. Army Corps of Engineers that spends
money in addressing flood damage reduction projects, hurricane
protection. The administration has budgeted, I believe it was,
$1 billion competition, resiliency competition, through HUD.
You have a climate resiliency fund the Department of the
Interior is trying to establish under the last budget request.
I think it was $2 billion. FEMA has a Hazard Mitigation Grant
Program and a Pre-disaster Mitigation Program. Does it really
make sense for us to have five different programs out there,
all attempting to address various aspects? Are these properly
coordinated? Are they properly prioritized?
And, you know, the reason I bring this up, I am from south
Louisiana and we have had more than our share of disasters,
whether it be Hurricanes Katrina and Rita coming up from the
south, we had record high water on the Mississippi River in
2011 and again this year in January for the first time ever, in
January of this year. We had Hurricanes Gustav and Ike in 2008,
Hurricane Isaac in 2012. We have had more than our share of
disasters.
And watching over and over again, as we come in and we have
FEMA come in and pick up the pieces after a disaster, together
with millions and millions of dollars spent by our parishes and
spent by our State government, the Corps of Engineers in some
cases--I can think of a project in St. John Parish, St. Charles
Parish affecting Ascension, Livingston, and St. James Parishes,
that that project has been in the study phase with the U.S.
Army Corps of Engineers now for over 40 years, over 40 years.
Mr. Chairman, Mr. Ranking Member, my point here is that,
look, everyone wants us to reduce disaster spending. Everyone
does. The solution here, as I think Ms. Clark noted, Mr. Koon
noted, the solution here is making the principal proactive
investments in making our communities more resilient.
In recent years we have had FEMA, with their 500-year flood
risk management regulations. We have had Biggert-Waters in
2012, the revisions in 2014. We have proposals now to increase
the cost share associated with disaster response on our
counties, on our parishes, and our State governments.
Mr. Chairman, my point is that making proactive investments
is the solution to reduce our overall disaster expenses. We
estimated that if we had spent somewhere around $8 billion or
$9 billion, simply finished authorized projects in south
Louisiana that were supposed to be built by the U.S. Army Corps
of Engineers, we could have saved an estimated 90 percent of
the about--and you can justify numbers--anywhere from about
$120 billion to $150 billion that were spent in response to
those 2005 hurricanes. We could have saved that. And not to
mention--and very, very important--in fact, more important, Mr.
Chairman, we think we could have saved over 90 percent of the
1,200 lives that were lost in south Louisiana.
So, all of these efforts by FEMA I think are being done in
a vacuum. We need to be coordinating, better coordinating our
efforts to be proactive, to protect and make our communities
and our ecosystem more resilient, and stop all this coming in
after the fact and spending exponentially more dollars. There
are studies, there are models. Yet all we are seeing, rather
than following the data, following the recommendations and the
outcomes of these studies and these experiences following these
catastrophic disasters, instead we are further making disparate
investments in programs that aren't really contributing or
heeding the recommendations of these reports. I am very
concerned about what--this trend that we are seeing.
And lastly, Mr. Chairman, I just want to say that in south
Louisiana much of our vulnerability is actually attributable to
the actions of the Federal Government. We have lost 1,900
square miles of our coast. The majority of that is because of
how the Corps of Engineers manages the water resources in this
Nation. That is why we have lost, that is why we have become
more vulnerable.
Arkansas doesn't care when hurricanes come because
Louisiana is their buffer. Our buffer is disappearing, and that
is why you are seeing these costs.
And so I just want to urge the committee, Mr. Chairman, Mr.
Ranking Member, as we move forward on legislation we need to
make sure we don't get too myopic in this view, and that we are
looking comprehensively at all of these efforts that are
underway that, quite frankly, should be under this
subcommittee's jurisdiction. I yield back.
Mr. Barletta. Thank you.
Mr. Sires?
Mr. Sires. Thank you, Mr. Chairman. You know us. We learn
from all these disasters.
Mr. Nimmich, we picked up how to better construct, do
better codes, everything else. Why do you think some of these
States are so reluctant to do this mitigation codes and
reinforcement? Why do you think that is?
Mr. Nimmich. Sir, I think the decision on building codes is
almost always local, and those decisions based on other
economic factors, desires for certain development.
But I do think that we, as the Federal Government, need to
continue to ensure that when we invest, it is invested to
codes. Currently, FEMA has out for comment with our stakeholder
groups changes to our Public Assistance Program that would
require whether a State has or a community has code or doesn't
have code. If they don't, if they want us to build back their
infrastructure, it will have to be built back to either a
national or an international code.
So we are taking it very seriously to say even if a
community doesn't feel that codes are of value, we do. And when
we invest Federal dollars, we will build back to a code.
Mr. Sires. You know, one of the things that bothers me
about New Jersey is the fact that 3 years later we still have
people that have not gone back to their homes. And there is
plenty of blame to go around, you know.
I think that, in terms of these disasters, you not only
have to mitigate it before, but I think there has got to be
some sort of post-disaster, where you are ready to come in and
watch over some of these guys that are the fraudulent
applications and everything else, and not take years before we
can come up with the people who are perpetrating a fraud.
And to me, I think you have to be ready right after the
disaster. Can you talk to that?
Mr. Nimmich. Yes, sir. And I can proudly say that we have
moved rapidly since Katrina to ensure that we have programs
that have as much protection as possible.
But I will tell you, sir, that if we have to err on the
side of supporting a valid requirement and a fraudulent
requirement, we are likely to support that requirement. But it
takes time to go back and relook.
And as you know, in New Jersey now you are seeing the first
cases of prosecution of fraudulent--where people have taken
money from those that need to recover in their primary homes,
claiming that their secondary home was a primary home, and
taking those dollars away from those people that need it.
It does take time, and we have to realize that during that
immediate post-disaster we want to make sure that those people
that need the money get it. And there will be people that take
advantage of it, but we don't give up. And as you said, sir, it
may take too long, but we don't stop. We continue to go back
and recoup those monies from people that fraudulently or
accidentally applied for resources that they didn't deserve.
We are down below the national standard--from financial
institutions in recovering money, down below 1 percent. So I
think we do a pretty good job of ensuring that the money goes
to those people who deserve it and need it.
Mr. Sires. You know, I come around--I used to be one of
these guys that you have to require certain things. And I come
around a lot to providing incentives. Because if the Federal
Government is going to give you some money, I think that
mitigation codes or storm codes should be part of it.
I look at these disasters in the Midwest. I see these
tornadoes, Oklahoma--I am not trying to single out Oklahoma,
but it just seems that they get more than anybody else. And I
see where schools are even damaged. You know, to me, if the
Federal Government is going to give a State money to build a
school, you should require a stronger code to build the
schools. And I understand that these schools were built before.
But, you know, going forward, I think that is something that we
should look into, because some of the schools always--they
serve as shelters, too, in some of these communities. And I see
the damage in some of these schools and some of these homes.
So I think--I am coming around to the idea of incentives,
Mr. Chairman, to provide these people so they can build the
kind of codes that they need to deal with some of these
disasters. Thank you.
Mr. Barletta. Thank you. I will now begin a second round of
questions.
Commissioner Clark, I understand your district had major
wildfires that destroyed a tremendous number of homes and
property. Can you explain some of the challenges you have had
trying to mitigate the risk of post-fire flooding? And do you
have any recommendations for Congress to improve our mitigation
programs?
Ms. Clark. Thank you, Mr. Chairman. Yes, we have,
obviously, had--and I don't know what fair share is, but we
have had more than our fair share of disasters in El Paso
County, Colorado. What I would like to talk about specifically
is the things that I think we can do from the standpoint of
local community resiliency.
And I think that what tends to happen--and it happens at
the local level, at the State level, and particularly at the
Federal level, is we have silos built up between agencies. The
fire that happened in Waldo Canyon was almost more than 95
percent on Federal forest land. That pre-mitigation needs to
happen from the Federal level, because that is Forest Service,
and the Forest Service is now spending more than 50 percent of
its budget on--frankly, on responding to wildfires, versus pre-
mitigating ahead of time. We have no control over that at the
local level.
What we do have control over is working with fire-adapted
communities, community wildfire protection plans, and providing
incentives, as some have said up here, which is very important,
but for individuals to be able to mitigate ahead of time, to
provide firewise communities.
I was just up in, actually Crystal Park, which is a one-
way-in, one-way-out community built up on the mountainside. And
they have taken steps to do that. And some of those programs
that help them buy fire equipment to be prepared locally, to
take that ability to look at, from a personal standpoint, to be
able to provide that mitigation, will be helpful. We tend to be
really--you know, when we look at an ounce of prevention is
worth a pound of cure, doing that pre-mitigation ahead of time.
I also think it is important to note that we have--when
there is a disaster--and I have a small business, when the fire
happened I lost thousands of dollars of reservations, and then
we have this rolling disaster that keeps happening--to try and
make sure that those that may not live in wildland interface
areas, where the drainage all comes down into a small
community, to be able to look at the fact that that mitigation
immediately following the fire will provide the resiliency to
slow down the debris and the large flash floods that happen as
a result. And it is hard to understand, if you are not from
Colorado, because--if you are not from a Western State that has
those drainages that drain right down into it.
So I think tearing down the silos, understanding there is
an impact on small business and how devastating that can be--
one-third of small businesses go out of business after a major
incident, and I think that that is really important, and
looking at the flexibility in the requirements. Even though we
want--we definitely want accountability, but sometimes the
requirements preclude you from even asking for the particular
money that you may otherwise need.
Mr. Barletta. We talked a lot today about how much the
Federal Government pays out for disasters. But the other major
payers in disasters are insurance companies.
Mr. Nelson, can you discuss how insured losses generally
compare to the Federal assistance provided in the wake of a
disaster?
Mr. Nelson. In the wake of a disaster it is the role of the
insurance company to make that insured whole again. And so we
are paying for the building, we are paying for the contents. If
you are a small business, we are giving you business income
interruption coverage. We are also providing additional living
expense. And so significant dollars, compared to--you know,
usually individual grants are small grants to consumers. They
are not going to make you whole again. They are not going to be
enough to rebuild your home, in general speaking.
So, it is important. The insurance industry plays a major
role in natural disasters. And our trends, because of the
weather volatility, we have been seeing those trends go up. And
so this is an important concept because what do insurance
companies do? We spread the risk over people and over time. And
as the risk changes, the prices change. And so it is important
that we bend the cost curve for the Federal Government and bend
the cost curve for consumers.
Mr. Barletta. Every one of you mentioned the importance of
mitigation and how evidence shows that for every $1 invested,
$4 is saved. Most Federal mitigation funding is provided
through the Hazard Mitigation Grant Program after a disaster
declaration.
I ask this of every one of you on the panel, if you could
give a brief answer. How can we more proactively address the
mitigation and shift the investment to before the catastrophe?
Mr. Nimmich. Congressman Barletta, I think the first thing
I need to do is again thank the committee and the Congress for
the post-Sandy legislation that allows that mitigation money,
that post-disaster mitigation money, to be identified much
earlier in the process, and then be applied as part of the
recovery process.
Clearly, as we look at all of the different mitigation
programs we have--pre-disaster, in 2015 Congress gave us the
authority to do post-mitigation or hazard mitigation for fire
grants, to be able to restore those burned areas in a much more
robust way. I would ask that we could consider reauthorizing
that ability to use the fire mitigation grants as a hazard
mitigation grant developer.
But the reality for us comes back to how do you incentivize
every level, from the individual, through insurance programs,
to the local to the county to the State and the Federal
Government to be able to invest in that. We believe that the
deductible offers that opportunity. We continue to need to work
with our stakeholders to define what the reasonable level of a
deductible should be, and then how do those building codes and
the investments that Ms. Clark has indicated that the counties
and the communities do reduce that deductible in order to be
able to support those communities that have invested in their
own well-being.
I do believe that it is mitigation that ultimately reduces
the cost of a disaster, and we need to find proactive ways, as
you have all indicated, to incentivize that approach.
Mr. Barletta. Ms. Clark?
Ms. Clark. Thank you, Mr. Chairman. As it relates to the
Hazard Mitigation Grant Program, it is a very important
component of, I think, what communities need to be provided
for. There are some issues, I think, within the HMGP programs
that need more flexibility, however, in order to be able to
utilize those funds best at the local level. We see sometimes
that there is not an understanding of unique situations, and I
will give an example
In 2012 was the Waldo Canyon fire. We just closed on three
houses 2 weeks ago for several homes that were in the floodway
as a result of a fire that happened on Federal forest land.
They had never had flooding ever before, and it has taken us,
really, that length of time to get that completed.
As it relates to, additionally, the Hazard Mitigation Grant
Program, we at our Office of Emergency Management appreciate
being able to utilize those dollars, but sometimes the
accountability, where you may see it as accountability, the
paperwork is so extreme for such a small amount of money that
it makes it really unusable for us to even apply for the
grants.
And so, we do take it very seriously, but I think sometimes
those programs need to be looked at as how can those dollars
actually get to the folks that need the help and provide some
additional assistance for those individuals who want to take
personal responsibility for trying to reduce mitigation--to
reduce the disaster, eventual disaster declarations, by looking
at being proactive on their own personal property.
The Black Forest fire was almost entirely on private
property. That was the second fire. So we have two different
fires, and we have seen different problems in each of those.
Mr. Barletta. Thank you.
Mr. Koon?
Mr. Koon. Thank you, Mr. Chairman. The--as a director of
the Florida Division of Emergency Management, I have the luxury
of a fairly large staff and adequate funding. And so, every
time there are new programs out there, every time there are new
incentives, I have personnel whom I can assign to that to make
sure that we take full advantage of that program.
However, a good number of States do not share that luxury,
and a good number of the counties across the country do not
have that same luxury. So every time a new program is put into
place, they have to determine how they can help meet the needs
of that program, because they are using current staffing,
current year budgeting and the potential for a payoff down the
road.
So I think a few things would assist in this effort. What
would be--as Mr. Graves suggested, consider clarifying,
consider consolidating, consider streamlining existing programs
today, rather than creating just additional new programs, which
would enhance the administrative burden on already overworked
officials at the State and local level.
I think a better data analysis of the true costs of
disasters and how they impact all levels will help us calculate
the true return on investment for our participation in these
programs, and help us make those decisions.
And finally, moving the mitigation cycle, moving the
mitigation program forward, and so that it is not something we
start thinking about on day one of the recovery, it is
something that is done ahead of the disasters, so that if the
funding comes along with that disaster, we are ready on day one
with actionable mitigation plans to help--implementing those
programs, and we don't rebuild exactly as we were before.
Mr. Barletta. Thank you.
Mr. Nelson?
Mr. Nelson. First, I just want to start with we have to get
the word out about mitigation. There is a perception that
mitigation costs so much money to consumers. Travelers, we are
a proud supporter of Habitat for Humanity. We went out and we
built a dozen fortified homes along the coast of America, and I
personally participated in building one in New Haven,
Connecticut. The average cost is only 2 to 5 percent on new
construction. And so, we just have to make sure that consumers
understand this. And so that is first.
Second, clearly, you got a difficult decision in front of
us. You know, spending is so difficult in Congress today,
everyone understands that. But we have to consider spending
more at pre-disaster mitigation funds--again, proven techniques
with IBHS and other studies--and evaluate that, and evaluate
streamlining some of these FEMA programs. Thank you.
Mr. Barletta. Mr. Mickey?
Mr. Mickey. I think just as importantly, we have to
understand that the action of mitigation is not simply
something you do to check a box and get FEMA to sign a check
over and move on. It is something that needs to be a proactive,
positive investment to incentivize, again, those communities we
are promoting through the institute to take positive actions.
Mr. Barletta. Thank you.
Ranking Member Carson?
Mr. Carson. Thank you, Chairman.
Ms. Clark, disaster assistance reformed under the act of
2015, the committee calls for a very comprehensive study on
trends and disaster costs and losses. As you mentioned earlier,
local government bears a large portion of the disaster costs,
yet data is very scarce. What is NACo doing to collect the
information so that the data can be considered as part of the
comprehensive study, and ensure that current Federal disaster
costs are not just being shifted to local communities?
Ms. Clark. I am assuming that is for me. I wanted to say
that I think that that brings up a very----
Mr. Carson. Or Mr. Koon.
Ms. Clark. OK. I will start and then--I think that the--
that local government really is here from the Government, and
here to help. We want to know from you how we can best provide
you the data and the information.
For those of us who have done this before--and in my case
we have had four declared disasters, so we have got a lot of
information. And I think it would be helpful to sit down with
those communities that have been through the processes, and all
the different silos, and to be able to have feedback from us on
how to change things that--policies that may not be working in
the best interest, first of all, of our communities and,
secondly, of our local governments.
Mr. Carson. OK.
Mr. Koon. Ranking Member Carson, the question you asked is
a question that many of the folks asked as they were responding
to the proposed deductible concept from FEMA, which is how do
we capture all of those costs? What is the methodology? What is
going to apply in that situation? Is it you go out and remove a
tree that just fell in the road overnight, or do you--is there
a certain threshold at which you start measuring those dollars?
We still are having those kind of conversations to figure out
exactly what costs do we need to capture.
But I do agree that it is very important that we do so
because, again, that helps feed the return on investment
calculations that we need to do in this situation.
The flip side of what I offered earlier--and the fact that
I have a fairly large agency and a fairly adequate budget, is
that the threshold for Florida to receive a Presidential
declaration is also fairly high. And so, we can have a $10
million or $20 million or even a $25 million disaster in the
State of Florida that will not be eligible for a Federal
declaration. So every year the State of Florida spends hundreds
of millions of dollars internally at the State and local level
to help us recover from those situations.
So I concur that we should develop methodology by which we
can all operate off the same sheet of music when understanding
what these costs are.
Mr. Carson. Yes, sir. Thank you.
Mr. Nelson, you mentioned in your testimony that the
Insurance Institute for Business and Home Safety simulating
disaster conditions on homes and businesses in a controlled
environment, you mentioned that. What types of adjustments to
building codes has the institute found to be most effective in
keeping a structure standing after a disaster? And how much
would these changes cost during new construction?
Mr. Nelson. You know, IBHS, we have come out with a program
called FORTIFIED. There's a bronze program. The bronze program
concentrates on the roof coverings. And so we have looked at
taping the roofs, the seams on the roof deck. And maybe that is
about $500 to $1,000. And that prevents water intrusion in case
you lose your shingles. So that is the first step.
The second step that is a proven technique is really
bolstering all your openings, either covering your openings or
putting some other reinforcements in place. And then the gold
standard is looking at the building kind of end to end, looking
how it is anchored at your foundation, through the walls, and
to the roof.
And so, these are techniques that we are very happy to say
some States have embraced. Alabama, coast of Alabama has now
embraced the FORTIFIED standards within their codes and their
coastal counties. And they have also put in a program to try
and--for mitigation grants.
And so, we are seeing a lot of success with this program.
We are even seeing some builders voluntarily building these
homes.
Mr. Carson. Thank you.
And lastly, for a fellow Hoosier, Mr. Mickey, The Polis
Center provides valuable services necessary to understanding
the disaster threat and risk. How does The Polis Center help us
understand, make its services known to others, and can you
expand on some of the successful collaborative projects with
State and local entities that the center has taken?
Mr. Mickey. Thank you for the opportunity to talk both
about The Polis Center and, quite honestly, the State that I am
very proud of, the State of Indiana.
Polis has been around since 1989. We have had 27 years of
successfully linking community and academic expertise. Our
goals are to build capacity in the State's agencies, the
volunteer associations, the citizens of the State of Indiana,
and so forth.
We have done a lot of work in emergency management, but the
reason that we have been successful is not because uniquely of
the resources in our center, but because of the atmosphere that
exists in the State of Indiana.
Case in point, within Indiana we have had the privilege of
working with the Indiana Department of Homeland Security to
complete mitigation plans in close collaboration with the
counties and cities and towns of the State of Indiana. The
approach we take is highly collaborative. So, unlike many
situations that we hear about where a plan is created and set
aside on a shelf, if you would--which, unfortunately, I think
does often happen--that plan becomes a living document,
something that the community is engaged in, that people are
brought to the table to discuss and be a part of. And I think
that is a critical component of making mitigation a success.
Part of the reason that we are also successful--and
something I am exceedingly proud of--is in the State of Indiana
we understand the importance of information. FEMA created a
tool that I am sure many of you are aware of a few years ago
called Hazus-MH. And Hazus has become a very significant part
of the portfolio of resources in the State of Indiana that we
use, the technology that allows communities to estimate the
impact of hazards, specifically floods, earthquakes, and
hurricanes, and they are able to do that in a more profound and
successful way by integrating local resources.
In my State I am happy to say that we have 100 percent of
the counties that, even though they have disagreements, to be
sure, they have managed to find a way to agree to share
information. So anyone, anywhere, any time can go out to the
IndianaMAP and download every single parcel in the State of
Indiana: road information, hydrology information, and of
course, hazard information. That information, combined with
other resources in the State, makes it possible for our
citizens to be much better protected and much better able to
respond to disasters than others might be.
We have taken that success story, I am proud to say, to
other States as well. We are very much about building capacity.
We have worked extensively in the States of Georgia, in West
Virginia, in many other areas. In total, we have worked in over
36 States, including, I believe, every one represented by
members of this committee, and over 100 cities.
Building capacity means building tools, it means building
work flows, it means, very importantly, education. And not just
in how to do hazard analysis, but also what that means to a
community, in terms of its long-term resiliency.
We believe firmly in connecting the fabric of the community
to the solution. So hunger, homelessness, issues like that are
just as important in understanding how a community will or will
not be resilient to a disaster as understanding whether a
building is going to fall down or stay upright. And we look at
all of those things and try to bring them together in a
synergistic way in conversations with a lot of people to take
advantage of that knowledge.
Mr. Carson. Thank you, sir.
Thank you, Mr. Chairman. I yield back.
Mr. Barletta. OK. Mr. Graves?
Mr. Graves of Louisiana. Thank you, Mr. Chairman.
Mr. Nimmich, the Biggert-Waters 12 directs FEMA to
incorporate simulations of climate change into some of the
estimates that you develop in regard to premiums. Could you
discuss how FEMA is doing that, and how you are addressing
uncertainties in regard to climate models?
Mr. Nimmich. So through Biggert 12 we have been required to
use the best science possible to determine the flood risk map,
sir, and we continue to work with the scientific community and
local communities to be able to identify what those potentials
might be in the future, in terms of climate adaptation,
particularly with the rising tides in flood zones.
Mr. Graves of Louisiana. Yes. And so the question is how do
you plan to address the uncertainties in regard to the models
of future sea rise and potential for storm intensity changes
and things along those lines?
Mr. Nimmich. Sir, I will answer that for the record.
Mr. Graves of Louisiana. Thank you. Another question. The
Technical Mapping Advisory Council that was established, they
indicated in a recent report that they believe that there was
about a 40-percent uncertainty rate associated with some of the
flood models that were used.
If you take that degree of uncertainty, which is
extraordinary, and you put on top of it trying to estimate
future changes in sea rise, future changes in the potential for
storm intensity and frequency, it seems like we are getting to
a range of uncertainty that--it is just no longer helpful to
even use those types of models and predictive information.
Could you comment on that?
Mr. Nimmich. Yes, sir. I don't think you can go to the
extent of not using some sort of a model or a predictive
capability when you are trying to determine whether mitigation
and preventative actions need to be taken. So, while there is a
certain degree of uncertainty, we continue to use the best
available information, based on a wide range of scientific data
that is available.
Is there uncertainty? There is always uncertainty in it.
But we have to start somewhere to be able to create a basis on
which the risk exists in the community.
As you well know, sir, in your area we have just
experienced floods in northern Louisiana that no one would have
expected, based on the science that was there. So there is a
great deal of uncertainty when you deal with any weather event.
So we need to continue to find the best science at the time
that we create the risk map and then, as often as possible,
come back and reevaluate that science.
Mr. Graves of Louisiana. Yes, and I certainly concur that
we need to be using the best information we can in regard to
informing decisions. The concern is that, as you know, there
are significant consequences of determining flood maps and NFIP
premiums. And with your 500-year flood risk management, there
could be significant and severe financial implications.
My point is that, having such severe implications, yet
having so much uncertainty with the predictive models, that is
not necessarily a very comfortable combination of issues. And I
just want to urge, as you move forward, that you keep that in
mind, that--you need to keep in mind the reliability of the
information and models, and take into account the consideration
of financial implications on counties, parishes, and others,
moving forward.
Director Koon, first I want to say that I know a number of
people that know you, and you have a great reputation. Thank
you for being here. And I appreciate your testimony.
A week before last, Congress--the House of Representatives
passed H.R. 2901, which was legislation--and Mr. Nelson, excuse
me, I am going to ask you a question on this, as well--that
bill, what it does is it begins--or it allows for private flood
insurance to serve effectively as a surrogate for the NFIP.
Sounds like a good idea. Private sector, in many instances,
could be more efficient than Government can.
So, face value, sounds like it is a good idea. However,
being from your area, being from the area where I was born and
live, I am very concerned that what we are going to see is we
are going to see private insurers that come in that start
cherry-picking the policies that have the lowest risk.
And so, what ends up happening under Biggert-Waters 12 and
the reforms in 2014 is you are left with the policies that have
higher risk.
Now, Biggert-Waters 12 and the revisions from 2014 require
that the loan that was given to NFIP following the 2015 floods,
that it be repaid. It requires that a reserve fund be
established. It requires that actuarial rates be charged under
flood insurance.
So my point is that the private sector insurance companies
aren't going to have those same financial burdens. All they are
going to have is whichever policies they choose. The NFIP is
going to have now a smaller pool of ratepayers because the
private sector is pulling some of those off. So you are going
to have the higher risk, small pool that are still going to be
subjected to establishing a reserve fund, paying off this debt
of, whatever it is, $17 billion.
Are those concerns--am I--should I not be concerned about
this? Is there something there that we should be concerned
about, and should NFIP reform be more comprehensive than just
doing H.R. 2901?
Mr. Koon. Thank you for the question, Congressman. And I
think, actually, the debt is closer to $23 billion on the
National Flood Insurance Program.
Mr. Graves of Louisiana. Thank you.
Mr. Koon. I think they would like to get to $17 billion.
The answer--my opinion is that there needs to be more
comprehensive reform of the National Flood Insurance Program.
And I would urge this committee to become engaged with that
conversation next year, when it is up for reauthorization, to
work with the Committee on Financial Services on that, because
there is lots of components of the National Flood Insurance
Program that I think directly relate to the conversation we are
having here today with regards to mitigation activities that
can take place across the country.
One of the things that I express quite frequently in the
State of Florida--and did so just yesterday before the
Governor's Hurricane Conference general session--as a result of
some of the actions during Biggert-Waters of 2012, we have seen
a significant reduction in the number of flood insurance
policies across the country, and specifically in the State of
Florida. The State of Florida has lost over 10 percent of the
flood insurance policies. We have gone from just north of 2
million flood insurance policies in the State to about 1.8
million.
What that means is those citizens, the next time they have
a disaster, next time they have a flood in their community,
they are not going to be able to recover like they would have,
had they had flood insurance, and there will be additional
costs imposed upon the Federal Government because they may now
be eligible for assistance from FEMA. They may be eligible for
assistance from the State, et cetera. So those costs are going
to be borne by the individuals, those costs are going to be
borne by Government.
So a comprehensive analysis and reform of the National
Flood Insurance Program, I believe, is completely appropriate
at this point.
Florida, last year in the legislative cycle, did do some
things to reduce some of the regulatory burdens on private
flood insurance in the State of Florida. And so now there are
private insurers offering flood insurance policies in the
State. It is very nascent at this point. There is probably
2,000 to 3,000 private flood insurance policies in the State,
but it is a start.
I do share your concern about some of the cherry-picking
aspects, and I am not an insurance expert, and I will defer to
Mr. Nelson on that, but we have had a similar situation in the
State of Florida with the Citizens Insurance Company and the
wind-borne insurance. They have depopulated a large segment of
their policies to the private market, and still remained
financial feasible. So I believe Mr. Nelson may be able to
elaborate on that a little bit.
But I believe, again, comprehensive reform of the National
Flood Insurance Program is absolutely appropriate at this
point, and can tie in some of the mitigation activities that we
have discussed thus far.
Mr. Nelson. Thank you. First, let me say I would echo your
concerns that you are raising. I think those are profound
issues that we have to evaluate. So----
Mr. Graves of Louisiana. Mr. Chairman, for the record, I
just want to note that he called me profound.
[Laughter.]
Mr. Nelson. So the--I do think, if you just step back for a
minute, Travelers--let me just back up. Travelers, we do write
flood insurance on a commercial basis for commercial insurance.
We do not write homeowners flood insurance and we have no plans
to enter that market. We also do not have a formalized position
on this, I will just express my own points of view.
So when you look at it--I have looked at a lot of the FEMA
rate plans--I think they need to modernize their rate plans.
The private industry should not be able to compete with FEMA on
price. Remember, we have to buy reinsurance. We have to have
enough capital to meet our obligations. That means we have to
have a pool of money. Typically, that is our shareholders'
money, so they have to get a return on that. We should not be
able to compete with FEMA.
And so you step back, their plan needs to be modernized.
Their rate plan, I have looked at it, it is not at all
consistent with how the private sector looks at insurance,
sells insurance, and has a rating plan. So let's start with
that, let's modernize the program, and then let's evaluate how
we can privatize to think about that cherry-picking aspect.
Thank you.
Mr. Graves of Louisiana. Thank you.
Thank you, Mr. Chairman, for your generosity.
Mr. Barletta. Thank you. And I think Mr. Graves made a good
point earlier, that Congress needs to look across the Federal
Government, including levees and flood control projects, when
we try to bend the cost curve of disasters. The disaster cost
study in our FEMA authorization bill should help and make such
recommendations to Congress.
And I also want to thank Administrator Fugate for the
disaster deductible proposal. I don't know if it is the right
solution, but we need a vigorous debate and innovative ideas if
we are to drive down losses and not just shift costs between
payers.
And I want to thank you all for your testimony. Your
comments today have been helpful in our discussion. If there
are no further questions, I would ask unanimous consent that
the record of today's hearing remain open until such time as
our witnesses have provided answers to any questions that may
be submitted to them in writing, and unanimous consent that the
record remain open for 15 days for any additional comments and
information submitted by Members or witnesses to be included in
the record of today's hearing.
[No response.]
Mr. Barletta. Without objection, so ordered.
I would like to thank our witnesses again for their
testimony today. If no other Members have anything to add, this
subcommittee stands adjourned.
[Whereupon, at 11:47 a.m., the subcommittee was adjourned.]
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