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June 21, 2012 – 12:02 a.m.

Movement on Flood Measure Threatened by a Wave of Dissent

By Alan K. Ota, CQ Staff

Insurers are rallying to halt the momentum behind an effort, led by Sen. Mark Pryor, to scuttle a proposed requirement that residents along major rivers buy flood insurance even if they already pay additional taxes for levees or dams.

“Why should people that don’t need flood insurance be required to buy flood insurance?” Pryor asked.

The Arkansas Democrat said a provision of the Senate’s flood insurance bill would put an unwarranted burden on communities in which residents pay local taxes to maintain flood-control structures that protect homes and businesses.

A memorandum circulated by Pryor’s staff indicates that the new mandate would probably touch every state, including 881 counties protected by flood control levees.

The requirement is part of the five-year flood insurance reauthorization (S 1940) that Majority Leader Harry Reid, D-Nev., says he would like to pass this week. Pryor has drafted an amendment, with allies such as Majority Whip Richard J. Durbin, D-Ill. “It’s going to be close,” Pryor said.

But the 1,400-member National Association of Mutual Insurance Companies has raised strong objections to Pryor’s amendment. “Supporters claim there are areas behind levees that would never flood. That provides a false sense of security to residents living in these areas,” said Matt Gannon, the group’s assistant vice president of federal affairs.

Leaders of both parties are hoping to pass the bill quickly and without controversy, and then cut a deal with the House before the current stopgap flood insurance law (PL 112-123) expires, at the end of July.

Banking, Housing and Urban Development Chairman Tim Johnson, D-S.D., and that panel’s ranking Republican, Richard C. Shelby of Alabama, are lining up with the insurance companies. They warn that Pryor’s amendment is likely to divide supporters of the bill and could complicate its passage.

“I’d lean against it,” Johnson said. “Levees sometimes fail. We’ve seen it before — for example, in New Orleans.”

Shelby rejected the argument that people living in an area protected by a levee or dam should be exempt from flood insurance coverage requirements. “That defies logic,” he said.

In a bid to head off support for Pryor’s proposal, Johnson and Shelby discussed an alternative proposal — developed by the Senate’s top Republican appropriator, Thad Cochran of Mississippi; Mary L. Landrieu and David Vitter of Louisiana; and Kay Bailey Hutchison of Texas — that would alter the language that Pryor wants to remove from the Senate bill.

The proposal softens the flood insurance requirement in part by keeping it from taking effect until there are “accurate pricing tools” for setting premiums that would take into account the reduced risk of flood damage in areas protected by levees.

After the unveiling of the Cochran proposal, Pryor said he still plans to press his amendment, which aims to delete language in the Senate bill designating areas near levees and dams either as special flood-hazard areas or residual-risk areas, subject to a flood insurance coverage mandate.

Movement on Flood Measure Threatened by a Wave of Dissent

He noted that the version of the bill the House passed nearly a year ago (HR 1309) does not require flood insurance near levees and dams.

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