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House passes disaster relief bill including NFIP debt forgiveness

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The U.S. House of Representatives on Thursday passed a $36.5 billion disaster relief bill that would forgive $16 billion in debt owed by the National Flood Insurance Program on a 353-69 vote.

The recent hurricanes have inflicted projected losses of $16 billion, meaning the NFIP will fully exhaust its financial resources, including its $30.4 billion in borrowing authority, and will be unable to pay claims by the latter half of the month, according to a letter from Office of Management and Budget Director Mick Mulvaney sent to Congress on Oct. 4. The administration has proposed canceling $16 billion of the program’s existing debt to provide immediate financial relief so the NFIP can fulfill its obligations to its policyholders, but also reforming the program to put it on a sound financial footing and to enable the private market for flood insurance to expand.

“The NFIP is simply not fiscally sustainable in its present form,” Mr. Mulvaney said in his letter.

House Appropriations Committee Chair Rodney Frelinghuysen, R-N.J., urged his colleagues on Thursday to move this legislation forward as it will provide $36.5 billion in emergency funding, including $18.7 billion for the Federal Emergency Management Agency’s Disaster Relief Fund and $576.5 million for wildfire efforts, in addition to the NFIP debt relief. The bill was brought to the House floor under special rules that allow for no amendments and limited debate and require a two-thirds majority to pass.

A White House statement published on Thursday stated that the Trump administration was pleased the House acted on the president’s request to “provide critical relief from the recent natural disasters.”

“Moving forward, the administration will continue to work with Congress to provide the resources necessary to recover and rebuild from the hurricanes and wildfires, and we urge Congress to adopt reforms to the National Flood Insurance Program to ensure the program’s long-term financial viability,” the administration said in the statement.

Congress should not forgive the debt unless comprehensive program reforms are made to ensure deficits do not reoccur, according to a letter sent to House and Senate leaders on Thursday by the SmarterSafer coalition, composed of taxpayer advocates, environmental groups, insurance interests, housing organizations and mitigation advocates.

Any debt forgiveness and NFIP reauthorization must include provisions such as accurate mapping, mitigation investments and consumer choice, meaning inclusion of a provision that would clarify that homeowners can satisfy mandatory purchase requirements with private flood policies, according to the coalition. A House-led effort to include this market parity provision in a bill to reauthorize the Federal Aviation Administration last month failed when it was stripped out of the Senate version of the bill.

The additional $16 billion needed to cover recent losses means that the program will be essentially $46 billion in debt to U.S. taxpayers, the coalition noted.

“Unless Congress fixes the significant problems in NFIP, that number will continue to increase, and Congress will continually be called on to either forgive debt or add to the program’s borrowing authority,” the coalition said in its letter. “Congress has a real opportunity to put the program on a more sustainable path before the program expires on Dec. 8, and we look forward to working with the administration and Congress to ensure NFIP and our other disaster policies work better for people in harm’s way, the environment and taxpayers.”