Vitter’s Efforts on Flood Insurance Help in Louisiana, but Builders See New Threats

Louisiana home builders today thanked Sen. David Vitter (R-La.) for championing flood insurance legislation to help Pelican State home owners and businesses while also warning that a recent executive order by President Obama could harm economic development locally and across the nation. The order would create a new Federal Flood Risk Management Standard for all federally-approved projects that would drastically increase the geographic extent of a floodplain.

Testifying at a full field hearing in New Orleans by the Senate Small Business and Entrepreneurship Committee, Jerry Passman, immediate past president of the Louisiana Home Builders Association and a home builder from Baton Rouge, said that flood insurance legislation enacted into law last year to address unreasonable flood insurance rate hikes and impacts to the local and national economy could be superseded by the new executive order.

“Sen. Vitter played an instrumental role in shepherding the Homeowner Flood Insurance Affordability Act through Congress in 2014,’ said Passman. “The legislation addressed some of the costly and unintended consequences of the Biggert-Waters Flood Insurance Reform Act, including huge flood insurance premium spikes and impacts on the sale, construction and remodeling of homes in Louisiana and the rest of the nation.”

Executive Order Amounts to ‘Regulatory Overreach’

Just as Biggert-Waters failed to foresee how costly rate increases from the sale or transfer of homes to full actuarial rates would harm home owners and local economies, the new presidential directive poses unanswered regulatory questions stemming from the new floodplain definitions.

“President Obama’s executive order amounts to regulatory overreach that could drastically increase flood insurance rates on Louisiana’s small businesses and home owners,” said Sen. Vitter. “Floodplain definition is not something that should be changed by presidential fiat, especially when it lacks any supporting economic analysis, scientific data or mapping.”

While the administration has stated the executive order is targeted to federally funded projects, Passman told senators that the scope could be much broader.

“A strict reading implies it could include homes built under FHA and HUD housing programs and the National Flood Insurance Program,” he said. “It could conceivably also affect permitting under the Clean Water Act if all waters in floodplains are subject to federal jurisdiction.”

Obama’s executive order updates a presidential action in 1977 that has limited federal floodplain management to the 100-year floodplain for nearly 40 years. The new order significantly expands the areas to be protected. Federal agencies must expand their jurisdictions for all federally approved or funded projects based upon one of three options:

  • The best available climate-informed science.
  • The freeboard approach (adding 2 or 3 feet of clearance above the base flood elevation of the 100-year floodplain).
  • The 500-year floodplain, defined as areas that have a 0.2 percent annual chance of flooding.

Though FEMA has hosted a series of listening sessions on the executive order, all were completed after the draft guidelines were released. Further, the executive order was put into place without any congressional oversight or public input.

Passman called on the administration to stop all efforts to implement the new Federal Flood Risk Management Standard until it provides a cost-benefit analysis to justify the rule, proper maps for regulators and the regulated community to review, and scientific or technical data to substantiate the basis for the rule. Ultimately, he added, any new flood standard should be limited to federally funded projects and facilities, not private permitting programs and housing finance programs.

Builders and HBAs are strongly encouraged to customize this letter template by May 6 and let FEMA know why the new executive order is a problem. In addition, HBAs should contact local elected officials and ask them to weigh in. You can give them this template to customize as well.

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