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See "Compromise" Text Offered By Four Southern Senators On "Residual Flood Risk" Re Levees & Mandatory Fed'l Flood Insurance

Potentially affects homeowners/comm'l property owners w/ federally backed loans in parts of LB/southeast L.A. County


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(June 25, 2012, 3:05 a.m.) -- LBReport.com reports the following at predawn Pacific time Monday June 25.

We have obtained from a Washington, D.C. source legislative text that would modify verbiage in the mandatory flood insurance section of a now-pending Senate bill that could require many Long Beach and southeast L.A. County area property owners (with federally backed loans) to purchase federal flood insurance. The bill could declare them at "residual flood risk" of flooding from L.A. river levees that were raised in the late 1990s-early 2000s to protect against flooding.

The language is reportedly being circulated as a "compromise" on "residual flood risk" by four southern Senators, they say with agreement by the chair (D) and ranking member (R) of the Senate Banking Committee.

The self-described "compromise" by Senators Thad Cochran (R-Miss.), David Vitter (R-La), Mary Landrieu (D-La) and Kay Bailey Hutchison (R-Texas) doesn't eliminate, and arguably institutionalizes, the legislation's entirely new provision that residents in an area protected from a "100 year" (0.01 annual chance) flood by levees and dams will be required to buy flood insurance on grounds they remain at a low "residual" risk from possible levee or dam failure.



The "compromise" also adds some additional technical requirements and necessary administrative findings (not in the original bill) which FEMA must complete before triggering the mandatory insurance provision. The "compromise" also arguably makes it more likely, not less, that the "residual risk" language -- which the House (including Reps. Rohrabacher and Richardson) voted to delete -- will survive a House-Senate conference committee and end up in the final bill sent to the House and Senate for passage.

The City of Long Beach's position in its Council-adopted federal legislative agenda (text below) is to oppose any designation of parts of LB at so-called "residual risk" without a formal flood insurance study.

In July 2011, the House voted to remove the "residual risk" language entirely from its version of the bill, and in August, Mayor Bob Foster sent a letter asking Senators Barbara Boxer and Dianne Feinstein to urge their Senate colleagues to remove the residual risk language from the Senate version...but that didn't happen.

As of predawn today, the text below isn't visible on the Library of Congress official bill webpage. The so-called compromise" text follows:

SEC. 107. AREAS OF RESIDUAL RISK.
(a) IN GENERAL.—Chapter III of the National Flood
Insurance Act of 1968 (42 U.S.C. 4101 et seq.) is amend6
ed by adding at the end the following:
 ‘‘SEC. 1368. AREAS OF RESIDUAL RISK.

 ‘‘(a) DEFINITIONS.—

 ‘‘(1) AREA OF RESIDUAL RISK.—Not later than
18 months after the date of enactment of the Flood
Insurance Reform and Modernization Act of 2012,
the Administrator shall establish a definition of the
term ‘area of residual risk’ for purposes of the national
flood insurance program that is limited to
areas that—

 ‘‘(A) the Administrator determines are located

 ‘‘(i) behind a levee or near a dam or
 other flood control structure; and
 ‘‘(ii) in an unimpeded 100-year flood
plain; and
‘‘(B) are not areas having special flood
hazards.

 ‘‘(2) OTHER DEFINITIONS.—In this section—

‘‘(A) the term ‘hydrographic subdivision’
means a subdivision of an area of residual risk
that is determined based on unique hydro4
graphic characteristics; and

‘‘(B) the term ‘unimpeded 100-year flood6
plain’ means that area which, if no levee, dam,
or other flood control structure were present,
would be subject to inundation from a flood
having a 1-percent chance of being equaled or
exceeded in any given year.

‘‘(b) TREATMENT OF AREAS OF RESIDUAL RISK.
Except as otherwise provided in this section, this title, the
Flood Disaster Protection Act of 1973 (42 U.S.C. 4002
et seq.), and the Flood Insurance Reform and Moderniza-
tion Act of 2012 shall apply to an area of residual risk
as if it were an area having special flood hazards.

‘‘(c) EXEMPTION FROM FLOODPLAIN MANAGEMENT
REQUIREMENTS.—A State or local government with jurisdiction
of an area of residual risk (or subdivision thereof)
shall not be required to adopt land use and control measures
in the area of residual risk (or subdivision thereof)
that are consistent with the comprehensive criteria for
land management and use developed by the Administrator
under section 1361.


‘‘(d) PRICING IN AREAS OF RESIDUAL RISK.—In carrying
out section 102 of the Flood Disaster Protection Act
of 1973 (42 U.S.C. 4012a), the Administrator shall ensure that
the risk premium rate for flood insurance policies for
a hydrographic subdivision does not exceed a rate
6 that adequately reflects
‘‘(1) the level of flood protection provided to the
hydrographic subdivision by any levee, dam, or other
flood control structure, regardless of the certification
status of the flood control structure; and
‘‘(2) any historical flooding event in the area.

 ‘‘(e) WAIVER OF MANDATORY PURCHASE REQUIREMENTS FOR
 DE MINIMIS RISK.—The requirements under
sections 102 and 202 of the Flood Disaster Protection Act
of 1973 (42 U.S.C. 4012a and 4106) shall not apply to
any property in an area of residual risk for which the risk
premium, as established in accordance with subsection (d),
is less than the equivalent of $1 per day, as determined
by the Administrator.

‘‘(f) DECERTIFICATION.—Upon decertification of any
levee, dam, or flood control structure under the jurisdic22
tion of the United States Army Corps of Engineers, the
Chief of Engineers shall immediately provide notice to the
Administrator.’

(b) DEFINITION.—In this section, the term ‘‘area of
residual risk’’ has the meaning given that term under
section 1368 of the National Flood Insurance Act of 1968,
added by this section.

(c) EFFECTIVE DATE FOR MANDATORY PURCHASE
REQUIREMENT.—The requirements under sections 102
and 202 of the Flood Disaster Protection Act of 1973 (42
U.S.C. 4012a and 4106) shall not apply to any area of
residual risk, until—

(1) the Administrator submits to Congress a
certification that the Administrator has completed a
study of levels of flood risk that provides adequate
methodologies for the Administrator to estimate
varying levels of flood risk for areas of residual risk;

(2) the mapping of all areas of residual risk in
the United States that are essential in order to ad17
minister the National Flood Insurance Program, as
required under section 118 of this Act, is in the
maintenance phase; and

(3) in the case of areas of residual risk behind
levees, the Administrator submits to Congress a
certification that the Administrator is able to
adequately estimate varying levels of residual risk
behind levees based on

(A) the design of the levees;
(B) the soundness of the levees;
(C) the hydrography of the areas of residual risk; and
(D) appropriate consideration of historical
flooding events in the areas of residual risk.

(d) STUDY AND REPORT ON MANDATORY PURCHASE
REQUIREMENTS IN RESIDUAL RISK AREAS.—

...
SEC. 108. PREMIUM ADJUSTMENT.
Section 1308 of the National Flood Insurance Act of
1968 (42 U.S.C. 4015), as amended by section 106, is
further amended by adding at the end the following:

‘‘(h) PREMIUM ADJUSTMENT TO REFLECT CURRENT
RISK OF FLOOD.—Notwithstanding subsection (f), upon
the effective date of any revised or updated flood insurance
rate map under this Act, the Flood Disaster Protection
Act of 1973, or the Flood Insurance Reform and Modernization
Act of 2012, any property located in an area
that is participating in the national flood insurance program
shall have the risk premium rate charged for flood
insurance on such property adjusted to accurately reflect
the current risk of flood to such property, subject to any
other provision of this Act. Any increase in the risk premium
rate charged for flood insurance on any property
that is covered by a flood insurance policy on the effective
date of such an update that is a result of such updating
shall be phased in over a 4-year period, at the rate of 40
percent for the first year following such effective date and
20 percent for each of the second, third, and fourth years
following such effective date. In the case of any area that
was not previously designated as an area having special
flood hazards and that, pursuant to any issuance, revision,
updating, or other change in a flood insurance map, becomes
designated as such an area, the chargeable risk premium rate
for flood insurance under this title that is pur6
chased on or after the date of enactment of this subsection
with respect to any property that is located within such
area shall be phased in over a 4-year period, at the rate
of 40 percent for the first year following the effective date
of such issuance, revision, updating, or change and 20 per11
cent for each of the second, third, and fourth years fol12
lowing such effective date.’’

The City of LB's Federal Legislative Agenda (list of general positions that the City of LB will support/oppose), last approved by the City Council in January 2012, includes the following:

Strongly oppose any legislation that would reclassify areas currently protected by recently upgraded, federally certified flood protection levees with no demonstrable history of recent flooding as "residual risk" zones that would be subject to mandatory flood insurance. In such areas locally, require FEMA to meet current requirements for a formal flood insurance study before attempting to rezone as a flood risk area.

In a release describing the "compromise," Senator Thad Cochran (R., Mississippi) states in pertinent part:

...Serious concerns over the Banking Committee’s initial treatment of levees, first raised by Cochran and Senator Mark Pryor (D-Ark.) last fall, were considered a major impediment to Senate passage of a long-term reauthorization measure. The original bill failed to give proper credit to federal, state, and local investments in levees and other flood control infrastructure.

The underlying measure that the Senate is expected to consider this week will include the agreement on Areas of Residual Risk (Section 107) to more fairly recognize the protection offered by levees and other flood control structures, eliminating the one-size-fits-all approach taken by the original proposal...

The original proposal approved by the Banking Committee would have unintentionally imposed burdensome land-use restrictions and mandated the purchase of insurance for all areas protected by a levee, including areas in the 500-year floodplain for a 500-year levee. Communities, homebuilders, realtors, floodplain managers and economic developers had raised serious concerns about the proposal’s effect on local economies and job creation.

The new provision largely addresses such concerns by:

  • Limiting the scope of risk to the natural 100-year floodplain
  • Doing away with land-use restrictions in areas protected by healthy levees
  • Delaying mandated flood insurance in areas protected by healthy levees until FEMA can develop tools to provide full credit for levee protection
  • Waiving mandated flood insurance in areas with minimal flood risk
  • Ensuring that prices in areas protected by healthy levees fully reflect investments made in local flood control infrastructure
  • Allowing FEMA’s internal reforms to the treatment of unaccredited levees to continue

FEMA is working with the National Academies of Sciences to develop analytical tools to accurately assess risk and set premiums for properties behind sound flood control structures.

The seeds of this agreement were sown last fall by Cochran and Pryor, who led a bipartisan effort to raise concerns that Section 107 of the Banking Committee’s legislation could unfairly place within Special Flood Hazard Areas all properties in a 500-year floodplain that are protected by a perfectly healthy 500-year levee.

Cochran, Pryor, and many others argued that the Banking Committee’s original Section 107 would have forced communities to pay multiple times for flood protection -- once for constructing and maintaining flood control structures, twice for mandated flood insurance and a third time for mitigation and land-use restrictions.

Watch for further developments on LBReport.com. including the U.S. Senate proceedings LIVE on our front page on TODAY Monday at 11 a.m. -- on LBReport.com.



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