[House Hearing, 109 Congress]
[From the U.S. Government Printing Office]




 
   FEMA'S FLOODPLAIN MAP MODERNIZATION: A STATE AND LOCAL PERSPECTIVE

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON REGULATORY AFFAIRS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 8, 2006

                               __________

                           Serial No. 109-205

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
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                                 ______

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
JON C. PORTER, Nevada                C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas                BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia        ELEANOR HOLMES NORTON, District of 
PATRICK T. McHENRY, North Carolina       Columbia
CHARLES W. DENT, Pennsylvania                    ------
VIRGINIA FOXX, North Carolina        BERNARD SANDERS, Vermont 
JEAN SCMIDT, Ohio                        (Independent)
------ ------

                      David Marin, Staff Director
                Lawrence Halloran, Deputy Staff Director
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

                   Subcommittee on Regulatory Affairs

                 CANDICE S. MILLER, Michigan, Chairman
CHRIS CANNON, Utah                   STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              WM. LACY CLAY, Missouri
LYNN A. WESTMORELAND, Georgia        CHRIS VAN HOLLEN, Maryland
JEAN SCHMIDT, Ohio

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                       Ed Schrock, Staff Director
                Erik Glavich, Professional Staff Member
                         Benjamin Chance, Clerk


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 8, 2006......................................     1
Statement of:
    Odeshoo, Janet, Deputy Regional Director, Federal Emergency 
      Management Agency [FEMA]; Lieutenant Colonel Donald Lauzon, 
      member, Corps of Engineers; Judson Gilbert II, Michigan 
      State Senator, 25th District; and Jon Manos, supervisor, 
      Clay Township..............................................    11
        Gilbert Judson...........................................    35
        Lauzon, Lieutenant Colonel Donald........................    23
        Manos, Jon...............................................    41
        Odeshoo, Janet...........................................    11
    Wilson, Chris, city manager of Algonac; Manfred (Whitey) 
      Simon, president, Harsens Island, St. Clair Flats 
      Association; and John Collison, owner, Sterling Real Estate 
      Co., representing Michigan Association of Realtors.........    60
        Collison, John...........................................    73
        Simon, Manfred...........................................    67
        Wilson, Chris............................................    60
Letters, statements, etc., submitted for the record by:
    Collison, John, owner, Sterling Real Estate Co., representing 
      Michigan Association of Realtors, prepared statement of....    76
    Gilbert, Judson, II, Michigan State Senator, 25th District, 
      prepared statement of......................................    37
    Lauzon, Lieutenant Colonel Donald, member, Corps of 
      Engineers, prepared statement of...........................    26
    Manos, Jon, supervisor, Clay Township, prepared statement of.    45
    Miller, Hon. Candice S., a Representative in Congress from 
      the State of Michigan, prepared statement of...............     6
    Odeshoo, Janet, Deputy Regional Director, Federal Emergency 
      Management Agency [FEMA], prepared statement of............    14
    Simon, Manfred, president, Harsens Island, St. Clair Flats 
      Association, prepared statement of.........................    69
    Wilson, Chris, city manager of Algonac, prepared statement of    63


   FEMA'S FLOODPLAIN MAP MODERNIZATION: A STATE AND LOCAL PERSPECTIVE

                              ----------                              


                          MONDAY, MAY 8, 2006

                  House of Representatives,
                Subcommittee on Regulatory Affairs,
                            Committee on Government Reform,
                                                 Clay Township, MI.
    The subcommittee met, pursuant to notice, at 9 a.m., at the 
Clay Township Offices, in Clay Township, MI, Hon. Candice S. 
Miller (chairman of the subcommittee) presiding.
    Present: Representatives Miller and Turner.
    Staff present: Ed Shrock, staff director; Erik Glavich, 
professional staff member; and Benjamin Chance, clerk.
    Mrs. Miller. It's 1 minute after 9. We are going to start 
this hearing on time, here. I certainly want to say good 
morning to all of you. We certainly appreciate all of you for 
coming.
    As you know, I'm Congresswoman Candice Miller. I'm going to 
call our Subcommittee on Regulatory Affairs to order and 
welcome you all here.
    This is a very excellent turnout. We see a number of people 
in the audience who are at different levels of government and 
everyday citizens and people who are involved in this issue and 
have had a great consternation about the issue and how it's 
impacting our entire State, quite frankly.
    We have titled our hearing, ``FEMA Floodplain Map 
Modernization, a State and Local Perspective.'' I'm going to 
make an opening statement that will hopefully lay out the 
groundwork a bit about the issue and what it means. We are 
going to be hearing testimony from Supervisor Jon Manos in just 
a moment. Let me thank him personally so much for really being 
the squeaky wheel in many ways, a principal advocate of this 
particular issue and bringing it to our attention, and Mike 
Pellerito, our township clerk, who joins us also, has met with 
us here in the boardroom and talked about this issue, and we 
have our township trustees and county commissioners who are 
here as well. So we appreciate the hospitality for all of us.
    We are holding this hearing to examine the State and the 
local impact of floodplain remapping. This is an effort 
currently underway by FEMA, the Federal Emergency Management 
Administration. Actually, it's happening nationwide but they 
are currently in our State right now.
    FEMA issues flood maps that delineate areas within the 100-
year flood zone and uses the maps to determine flood insurance 
rates.
    A 100-year flood, also known as the base flood elevation, 
is the calculation that represents a level of flood that has 1 
chance in 100 of occurring in a given year.
    Areas surrounding a potential flood source that are below 
this base flood elevation are included in the 100-year flood 
zone. If a property sits in the floodplain, then the owner is 
required by law to purchase flood insurance if he or she has a 
federally backed mortgage. And if an owner does not purchase 
the required insurance, then the mortgage lender is required to 
purchase it, and it adds, of course, the cost and the 
applicable fees to the mortgage.
    The National Flood Insurance Program, in my opinion, has 
all kinds of inequities. First of all, States with very little 
risk for experiencing flooding are funding the program at 
astronomical rates, at huge rates, while States that we see are 
flooded repeatedly year after year are essentially using FEMA, 
if I could categorize it this way, almost as their own personal 
ATM machines.
    As you can imagine, changes in the flood flap can have a 
dramatic affect on homeowners. FEMA is currently engaged in a 
project to update the flood maps around the Nation and convert 
them into a digital format.
    Before they began this project, just about every flood map 
in the United States was on paper and most of the maps were 
very, very outdated.
    Effective maps typically do not reflect changes in 
topography or real estate growth that has taken place over the 
last 30 years, of course.
    FEMA, and then Congress, both realize the need for modern 
digital maps. We do want to have the best maps, let's face it. 
And Congress is currently providing $200 million per year to 
FEMA for its modernization initiative.
    And St. Clair County FEMA expects to have new maps in 
effect by the end of next year. Everyone here, I think can 
agree that the floodplain maps are outdated.
    Here in Clay Township, the current flood maps became 
effective in 1982 and certainly a lot has changed in the past 
25 years.
    It is important that the flood maps that communities rely 
on for local planning, for local building ordinances, etc., and 
used by homeowners and mortgage lenders to determine flood 
insurance requirements, that these maps do reflect the growth 
that has taken place during that time. But I think FEMA is 
proposing to do something that has everybody in our area sort 
of scratching our heads here a bit, because they want to raise 
the base flood elevation an additional 14 inches.
    According to FEMA, the reason for this proposal is to 
ensure that the area flood maps, again, accurately reflect the 
area's risk of flooding.
    The proposal is based on an 1988 study on water levels in 
the Great Lakes which was conducted by the U.S. Army Corps of 
Engineers.
    We are not going to be here today to debate the science 
behind that study, but the last year the data used by the Corps 
for the study was 1986, which we all remember was a year that 
the Great Lakes hit their historic high.
    I was a township supervisor at the time in Harrison 
Township down in Macomb County. I remember those high water 
levels very vividly.
    FEMA'S proposal seems to contradict what everybody around 
here has witnessed over the past 20 years, and that is that 
Lake St. Clair has dropped almost 3 feet since 1986. It is now 
almost 5 feet below the current base flood elevation.
    If FEMA goes ahead with the proposal, the new base flood 
elevation will be 6 feet above the current lake level, even 
though the lake has been below its historic level since 1998. 
Over the past 20 years the lake's average level has dropped 11 
times.
    Furthermore, in the last 88 years, the Army Corps has been 
tracking lake levels for the last 88 years. The lake levels 
have changed an average depth of less than 6 inches per year.
    This is why so many of our local residents are very upset 
in that FEMA's proposal would be reasonable, perhaps, if this 
area was actually prone to all kinds of flooding every year.
    There are two tables of information on display here, and 
you might take a look at those. The table on your left, my 
right, I guess, includes statistics indicating the amount of 
money different States have paid into the flood insurance 
program between 1978 and 2002 and how much they have actually 
taken out. And, of course, these are the figures that were 
before the recent hurricanes that the Gulf area of our Nation 
experienced.
    Between 1978 and 2002 there were 10 States that received 
more in claims than they paid in premiums. These States 
received over $1.5 billion more from the program than they 
paid. Yet the average premium in those States was only $223.
    Michigan, on the other hand, paid almost $120 million more 
into the program than we have received. Yet the average premium 
for Michigan policy holders was almost $260. Quite a difference 
there.
    Obviously, we ask the question of ourselves, how can this 
possibly be? If you think about the nature of insurance, people 
that do not experience losses typically subsidize those that 
do. But, certainly, I think if a private insurance company 
decided to charge significantly higher premiums for policy 
holders with little or no history of claims, they would 
probably be hauled in front of our State insurance commissioner 
to answer the question of why that is all happening.
    The chart on your right, my left, I hope I'm pointing in 
the right direction, outlines data that is recent through the 
end of February of this year.
    In four States that are seemingly hit with hurricanes every 
year, the premiums per policy that will be paid to each of 
those States is an average of $175 below the rate that is paid 
by Michigan policy holders.
    You know, if you think about that just for a second, 
Michigan residents are paying on average 51 percent higher 
premiums than five Gulf States: Louisiana, Mississippi, 
Florida, Alabama, and Texas, which seems to me to be patently 
unfair.
    Obviously, we all watched the terrible events of Katrina, 
and some of the other hurricanes that hit Florida. And we are 
all Americans before everything else. We are Americans first, 
and we are a compassionate Nation, and we certainly feel for 
the people in those areas.
    However, if you look at the floodplains claims again in 
recent years, there is only two ways they can increase the fund 
into this flood insurance program. They either have to raise 
the premiums or force more people into the program. And to the 
residents of St. Clair County and, in fact, the entire State of 
Michigan, it seems obvious. They are trying to force more 
people into the program knowing they will not have to pay us 
back in the form of claim payments.
    Municipalities in St. Clair County that would be directly 
impacted by Lake St. Clair pay nearly $700,000 more in flood 
insurance premiums than they can expect to receive in an 
average year.
    For the county as a whole, here in St. Clair, residents 
will pay close to $1 million in premiums. But in 28 years, the 
county has received only $2.7 million from FEMA in the form of 
claims. And that means that in St. Clair County alone, this 
county has made more than $8.1 million to FEMA than it has 
gotten back in claims.
    What would FEMA's proposal do specifically to raise a 
floodplain here in Clay Township? Well, the average premium, 
again, for township is roughly $500, and local officials 
estimate that a minimum of 700 homes would be brought into the 
flood insurance program if this proposal, as is currently 
constructed, is finalized.
    This means in Clay Township alone, residents here would pay 
an extra $350,000 per year, or over $770,000 total. In 3 years 
Clay Township will pay more to FEMA than it received in flood-
loss claims over the life of the program.
    We can think about what that actually means as far as 
driving up property values and the potential impact on this 
area. And I'm afraid, and I think many of us fear, that FEMA 
perhaps is not taking all of these consequences in its proposal 
into account.
    In Congress, we feel that we need to take a very good look, 
obviously, at how the flood insurance program is run. It needs 
to be reformed in order to fix the inequities that are inherent 
in it. Until that time, though, residents need to be assured 
that the program is run fairly. And I truly hope that this is 
the case.
    I want to thank all of our witnesses who I will introduce 
in just a moment as they begin their testimony for this 
morning's very important hearing.
    I will tell you that it is extremely unusual to have a 
congressional field hearing, as we call it a field hearing, 
leaving Capitol Hill and going out into the community.
    I had initially thought about doing this hearing in 
Washington, because it is easy on many of the witnesses that we 
would have wanted to have there. However, this is an issue that 
impacts this area so dramatically, as I discussed with my other 
colleagues, we did decide to bring Washington out to Clay 
Township and into St. Clair County.
    I think it's an appropriate thing. Based upon the amount of 
participation we have this morning, I tell you sincerely, I'm 
glad you are all here. You will be able to hear this testimony. 
We will not be taking any specific action today. This is for us 
to gather information. Then we will be digesting it and we will 
let you--we will keep you up to date on exactly how the entire 
process is proceeding.
    Before we go to the witnesses, let me welcome another 
member of our subcommittee, introduce him to all of you, this 
is representative Mike Turner, who is an outstanding Member of 
Congress. He and I came into the Congress at the same time. We 
said we ran for office because we wanted to be freshmen again. 
We were freshmen in Congress for a short period of time.
    But Congressman Turner is from Ohio, our neighboring State 
of Ohio. He has been a former mayor of Dayton, OH. As I 
mentioned to the supervisor, he is very well familiar with 
local issues, planning issues, and ordinances and how things 
like this can impact a community or a city or a township.
    He serves with me on the Government Reform Committee, the 
subcommittee is under the Government Reform Committee, which is 
a committee that I am very proud to serve on, as is Congressman 
Turner. We both like to think of ourselves as reformers of 
government. And we have been very involved in a number of 
various issues, and I appreciate him taking the time to come 
from Ohio today. We will both be back in session tomorrow in 
Washington. I want to welcome Congressman Turner to the 
hearing.
    [The prepared statement of Hon. Candice S. Miller follows:]

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    Mr. Turner. Thank you. Thank you, Chairman Miller. I 
appreciate you having me here for this hearing. I think having 
a field hearing is always important because it gives us the 
opportunity to expand the congressional record on a particular 
issue.
    By coming out to this community and having this hearing, 
Chairman Miller has really taken to Washington all of the 
testimony and all of the input that will occur here today as an 
attempt to impact this overall issue. So many times if you have 
a hearing in Washington, it's just one of many other hearings 
where you have input on Federal issues. But when you take it to 
a local perspective and you get the local view, and you can 
marry it to the processes of this committee and you can take it 
back to Washington, you can enhance your effectiveness.
    Chairman Miller, by bringing this here, has helped 
highlight this issue and will make a big difference when she 
takes this information back to the committee and back to 
Washington.
    I know you are all very proud of your Congresswoman. I am a 
big fan of hers. As you know, with her background serving on 
the State level or the local level, being an individual who 
knows how to get in and run things and understand the 
importance of issues and how they impact people's lives, she is 
a great advocate for you in Washington. She is a great advocate 
for personal liberties and for personal responsibility.
    I served with her also on the Armed Services Committee, in 
addition to serving on the Government Reform Committee, where 
she is a strong advocate there for your local community.
    I know she played a big role in the outcome of the BRAC in 
this area and making certain that the facilities that you had 
here had a strong voice. And as I'm certain many of you know, 
she has been a national voice on the issue of the impact of 
illegal aliens on both the number of congressional districts 
that are awarded to States on the electoral college. She came 
to Ohio and testified before the Ohio House on the important 
issue of our census counting illegal aliens for allocating 
States, congressional representatives, based on the resident 
illegal aliens in their State. It's an issue in an inequity 
both to Ohio and, I believe, to Michigan. It's wonderful that 
she has brought national attention to an issue that concerns 
fairness.
    This is an issue of fairness also. And it's great that 
Congresswoman Miller, as her chairmanship of this committee, is 
reviewing the issues of FEMA and of the floodplains and as they 
relate to insurance, and the economic impact to your community.
    We all know, as we have seen in the Katrina catastrophe, we 
need to take a closer look at how our Federal agencies operate. 
And it's all a part of Congresswoman Miller doing that to make 
certain that, on the local level, people are served by what 
occurs on the Federal level.
    People are always very disappointed when they look at 
States' programs and find that their donors to programs that 
perhaps are benefits to others. And the only way to make 
certain that we have that equity is to have strong voices like 
Chairman Miller. I appreciate being here. I look forward to the 
testimony and I look forward to the additional input from FEMA.
    Mrs. Miller. Thank you very much. Because the Government 
Reform Committee is the only committee in the House that has 
subpoena authority, it is always the process of the committee 
to swear in any of our witnesses who are going to testify. If 
you will all rise, please, and raise your right hands. If there 
is--not everybody in the audience because you won't all be 
testifying, just our witnesses here that will speak.
    Although I could swear you all in, who knows what you would 
say.
    [Witnesses sworn.]
    Mrs. Miller. Thank you very much. I appreciate that.
    And you will see these lights, as do our witnesses that go 
on here. Obviously, the red light, when we get--we try to keep 
the testimony within about a 5-minute timeframe, but I'm not 
going to cut you right there. Just to sort of keep the flow of 
it, you will see these lights on, when the red light goes up 
there, that has been 5 minutes.
    Our first witness this morning is Janet Odeshoo. Am I 
pronouncing that correctly?
    Ms. Odeshoo. Odeshoo.
    Mrs. Miller. She is the Deputy Regional Director for the 
Federal Emergency Management Agency [FEMA], at the regional 
office in Chicago. She has been there for 10 years. She's 
currently responsible for the implementation of disaster 
response and recovery activities and oversight of FEMA's 
prevention activities and preparedness activities for the 
States of Illinois, Indiana, Michigan, Minnesota, Ohio and 
Wisconsin. She has worked for FEMA for over 25 years. During 
that time, she was the Director of the National and 
Technological Hazards Division, which was responsible for 
administration of the National Flood Insurance Program, the 
Earthquake Hazards Reduction Program, the Chemical Stockpile 
Emergency Preparedness Program and the Hazardous Material 
Program as well.
    She has been overseeing programs, including the National 
Flood Insurance Program, trying to assist communities in 
reducing or eliminating the effects of disasters on people and 
property.
    We certainly welcome her to the hearing this morning. We 
appreciate you taking the time to travel to Clay Township. The 
floor is yours. We look forward to your testimony.

STATEMENTS OF JANET ODESHOO, DEPUTY REGIONAL DIRECTOR, FEDERAL 
 EMERGENCY MANAGEMENT AGENCY [FEMA]; LIEUTENANT COLONEL DONALD 
LAUZON, MEMBER, CORPS OF ENGINEERS; JUDSON GILBERT II, MICHIGAN 
 STATE SENATOR, 25TH DISTRICT; AND JON MANOS, SUPERVISOR, CLAY 
                            TOWNSHIP

                   STATEMENT OF JANET ODESHOO

    Ms. Odeshoo. Thank you. Good morning, Chairman Miller. I am 
Janet Odeshoo. I'm Deputy Director of the U.S. Department of 
Homeland Security Federal Emergency Management Agency Region V 
Office in Chicago.
    As Chairman Miller said, I have been with FEMA for over 25 
years. I'm a career FEMA employee, and all of my 25 years of 
government have been with FEMA. I have a lot of experience in 
emergency management.
    I appreciate the opportunity to appear before the 
Subcommittee on Regulatory Affairs. I will highlight some of 
the information in my written testimony for your consideration.
    I am aware of the controversy concerning our remapping of 
flood risk in St. Clair County and recently received a copy of 
Michigan House Resolution 158 urging FEMA not to remap flood 
risk in several Michigan counties.
    Michigan House Resolution 158 discusses an economic 
hardship that must be born by those required to buy flood 
insurance. It is our belief, based on prior experience, working 
firsthand with flood disaster victims, that uninsured flood 
damage causes far greater economic hardship.
    Many of the Nation's flood risk maps need to be updated, 
St. Clair County's maps included.
    Most communities in the county that have voluntarily joined 
NFIP have flood risk data that is more than 25 years old.
    In 2003, FEMA launched the congressionally mandated Flood 
Map Modernization Program called Map Mod to update and 
modernize the Nation's flood insurance rate map over a 6-year 
period. St. Clair County--is part of the national Map Mod 
efforts.
    Identifying flood risk is very important and FEMA uses the 
best information available when we prepare new maps.
    The base flood elevations [BFEs], for waterways in the 
Great Lakes system that have shown on the existing flood 
insurance rate maps were derived from data compiled by the U.S. 
Army Corps of Engineers in 1977.
    In 1988, the Corps updated their earlier work and published 
a report entitled Phase I Revised Report on Great Lakes Open 
Coast Flood Levels. The Corps published a Phase II report that 
revised BFEs for the St. Clair River and other connecting 
waterways.
    Since the Anchor Bay portion of Lake St. Clair has 
different dynamics, the State of Michigan contracted with the 
Corps to do a separate study on expected flood elevations on 
Anchor Bay. That report was completed in 1989.
    Lack of funding prevented us from updating the flood 
insurance rate maps for communities at that time to reflect 
this new flood risk data. However, these reports represent the 
best available data that we have for the Great Lakes region, 
and with map modernization, that new data is being incorporated 
into the digital flood hazard map we are now producing for all 
counties in the Great Lakes.
    Clay Township officials have referenced a report from the 
International Joint Commission that they interpret as refuting 
Phase I and II reports.
    It is our understanding that the Corps will address the 
technical merits of these reports in more detail.
    A common theme in the IJC and Phase I and II reports is the 
cyclical nature of the Great Lakes water level. A building 
constructed in the floodplain of a Great Lakes system waterway 
is likely to exist through a number of high and low-water level 
cycles. Lake level may be cyclically low now, but they will 
rise.
    The GIS format Flood Insurance Rate Maps [FIRMS], have not 
yet been compiled, but Macomb County, which is adjacent to St. 
Clair County, is further along with the remapping process and 
can serve as an example of our mapping in this area.
    The display FIRM provides examples of the old and revised 
floodplain delineations in the St. Clair shore area. We have 
added information on the revised map to make it easier for you 
to compare the limits of the old and new floodplain boundaries.
    The revised map identifies the floodplain based upon data 
and the Corps' Phase I report. Please note, although the 
floodplain now includes some structures that were not located 
in the floodplain before, many structures that have previously 
been identified in the floodplain--I'm sorry, let me repeat 
that. Please note, although the floodplain now includes some 
structures that were not located in the floodplain before, 
using better topographic data provided by the county has 
allowed us to remove many structures that had previously been 
identified in the floodplain. The Macomb County FIRM will 
become effective on September 29th of this year.
    The decision to map or not to map flood risk zones cannot 
be based on the perceived economic impact of the cost of flood 
insurance. It must be based on risk and risk must be based upon 
science.
    Valid scientific methods and the best-available data were 
used in the 1988 Phase I and II, as well as the Anchor Bay 
reports.
    Although we anticipate little change in expected flood 
elevations, we have asked the Detroit district to validate the 
1989 Anchor Bay analysis to incorporate recent engaged data to 
determine impact on expected flood levels in St. Clair County.
    To conclude, FEMA remapping uses the best science available 
to model the risk and present that information to communities 
so they can use it to guide development and protect their 
citizens.
    It is important to understand that FEMA will continue to 
accept and consider any technical or scientific data or 
information on flood risks. Data supporting a map revision may 
be submitted at any time.
    As technically valid data is developed, new digital mapping 
format will allow us to easily revise the maps to incorporate 
new modeling that meets NFIP Guidelines and Specifications.
    Ignoring or minimizing flood risk serves no use or purpose. 
Our communities and citizens benefit from knowing the valuable 
information they need to make responsible risk management 
decisions.
    Congress has mandated that we update our maps to more 
accurately identify flood risk. We remain committed to 
providing the best available flood risk data using the 
financial resources provided and the congressional support of 
Map Mod to produce the best maps we can.
    Thank you for providing the opportunity to share these 
views today. I will be happy to answer any questions that you 
may have.
    Mrs. Miller. Thank very much. We appreciate the testimony.
    [The prepared statement of Ms. Odeshoo follows:]

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    Mrs. Miller. Our next witness is Lieutenant Colonel Lauzon, 
who actually is one of our neighbors. He lives at Selfridge Air 
National Guard Base. He is going to be retiring unfortunately--
I think very unfortunately, is it the end of June.
    Colonel Lauzon. July, ma'am.
    Mrs. Miller. July. He has done a remarkable job as a member 
of the Corps of Engineers and for our community, in particular.
    Previous assignments include service as chief operations 
with the Defense Mapping School in Virginia. He is a resident 
engineer at Fort Dix in New Jersey, a company commander of the 
299th Engineer Battalion at Fort Carson, CO, and also Oklahoma. 
He was also Deputy Chief of Engineers at the Army Corps of 
Engineers headquartered in Washington. We have worked together 
over the years and he has served here in our area on a number 
of issues that have had a huge impact for our immediate 
community here. He was very responsible in assisting with the 
dredging of the St. Clair River, as well as out into Lake St. 
Clair freighter channels. He has worked with us on dredging 
assignments throughout the area on environmental management 
activity that is happening for the St. Clair River basin and 
out into Lake St. Clair as well. So certainly we have 
appreciated his services. He spent quite a bit of time in Iraq, 
and certainly for all Americans, appreciate this great patriot 
and the floor is yours, Colonel Lauzon. We look forward to your 
testimony.

         STATEMENT OF LIEUTENANT COLONEL DONALD LAUZON

    Colonel Lauzon. Good morning, Chairman Miller and 
Congressman Turner.
    I first like to thank both you for your leadership roles on 
the Armed Services Committee. Thank you for your service to the 
Nation.
    My name is Lieutenant Colonel Donald Lauzon, 52nd Commander 
of the Detroit District of the U.S. Army Corps of Engineers.
    I appreciate the opportunity to appear today before the 
Subcommittee on Regulatory Affairs. It is an honor to be able 
to testify on such an important topic.
    The Detroit district, which faithfully served the Great 
Lakes region in the Nation since 1841, covers 82,000 square 
miles of land and has over 4,000 miles of Great Lakes 
shoreline.
    The district's major mission is to investigate, plan, 
design, construct, operate and maintain congressionally 
authorized water resource projects throughout the Great Lakes 
basin.
    The district also operates and maintains the world famous 
Soo Locks, as wells as 94 harbors throughout the Great Lakes.
    In support of the Nation, the U.S. Corps of Engineers often 
provides technical support to other government agencies, 
including the Federal Emergency Management Agency.
    Over the years, the Corps has done a variety of work for 
FEMA, and this has included the determination of 100-year flood 
elevations for the Great Lakes.
    This testimony provides a summary of the Great Lakes flood 
levels studies that were done. It is being provided in response 
to recent concerns about FEMA's remapping of flood risk in St. 
Clair County.
    In 1974, FEMA contracted the Corps of Engineers to 
investigate methods and determine the 100-year flood levels for 
the U.S. shoreline of the Great Lakes.
    Based on these investigations and subsequent reviews from 
the Great Lakes States and other Federal agencies, a procedure 
was adopted. Using this procedure, the Corps of Engineers 
derived flood levels for the Great Lakes and their connecting 
channels with certain probabilities of occurring.
    The results were provided to FEMA in 1977 in a report 
entitled Report on Great Lakes Coast Flood Levels. It was the 
flood levels from this report that FEMA used to map the 
original 100-year floodplains.
    In the mid-1980's, the Great Lakes experienced record high 
levels which resulted in significant flooding and damages. In 
some locations, the reported water levels equaled or exceeded 
the 100-year flood levels published in the 1977 reports.
    In 1987, FEMA contracted the Corps of Engineers to update 
the 1977 report. This update retained the basic approach 
utilized in the 1977 report and incorporated additional water 
level data through 1986. The methodology and the resulting 
flood levels received considerable State and Federal agency 
review.
    The revised flood levels were provided to FEMA in 1988 in a 
report entitled Revised Report Great Lakes Open Coast Flood 
Levels.
    The method adopted in both the 1977 and the 1988 reports 
analyzed peak levels recorded at water level gauges each year.
    Based on the number of years in the gauge record, and the 
number of times levels were exceeded, water levels with certain 
probabilities of being exceeded were determined.
    The 100-year flood level represents an event that has a 1 
percent chance of being equaled or exceeded in any given year.
    All the water level gauges on the Great Lakes and the 
connecting channels, with at least 10 years of records, were 
used in the 1977, as well as the 1988 reports.
    The highest instantaneous water levels recorded each year 
were used in these analyses. These water levels include both 
the still water level of the lake and the wind set-up at the 
gauge location. Wave run-up caused by storm waves meeting the 
shore was not considered in the 1977, nor the 1988, report.
    For communities bordering Lake St. Clair, flood levels 
determinations were made using water levels recorded at St. 
Clair--at the St. Clair Shores gauge. At this gauge, the 100-
year flood elevation increased 13 inches from the 1977 report 
to the 1988 report.
    The Anchor Bay portion of the Lake St. Clair has a 
different dynamic than the open lake. Strong winds often push 
water higher in the bay than on the lake's open coast. For that 
reason in 1989, the State of Michigan contracted the Corps of 
Engineers to do a special study to determine the 100-year flood 
elevations in Anchor Bay. Wave run-up was not included.
    The Anchor Bay study resulted in a 100-year flood 
elevations that are 2 to 5 inches higher than the level for the 
open coast in the 1988 report.
    FEMA is using the flood levels from the 1988 Great Lakes 
open coast to update the flood maps for the open coast of the 
Great Lakes and their connecting channels.
    For Anchor Bay, FEMA is using the elevations from the 1988, 
1989 special study contracted by the State of Michigan.
    During the 12 years following the record high levels of 
1986, the Great Lakes continued to be well above average.
    In the late 1990's, very dry conditions across the Great 
Lakes basin, coupled with the mild winter and very little snow 
or ice cover, caused a rapid decline on water levels on Lake 
St. Clair.
    By 1999, the level of Lake St. Clair was below its long-
term average. In the 6-years since then, the level of St. Clair 
has remained at or below its long-term average.
    What effect adding these 19 years on both high and lower 
levels would have on flood frequencies is not clear and would 
need to be evaluated.
    Water level fluctuation on the Great Lakes is driven by 
weather. The Great Lakes have been in existence for thousands 
of years but water levels have only been recorded for a 
relatively short portion of that time.
    It is very likely that lakes may reach higher and lower 
levels than those that have been recorded. Flood levels 
statistics only predict the probability that certain levels 
could occur. They cannot predict future floods.
    There have been questions concerning a 1993 report 
completed by the International Joint Commission, the report 
referred to as the Levels Reference Study, Great Lakes and St. 
Lawrence River Basin. This study was conducted in response to 
record high waters in the mid-1980's. One part of the study 
looked at water level statistics for decisionmaking. The Levels 
Reference Study did not determine probable flood levels, but 
did develop methods for looking at lake level probability for 
an evaluating proposed regulations plans.
    In conclusion, there are many techniques and factors that 
can be considered in determination of probable flood levels. 
The methodologies used in the 1988 Great Lakes Open Coast 
Report and the 1989 Anchor Bay Special Study were reviewed by 
multiple agencies and are considered to be valid approaches for 
determining probabilities along the Great Lakes and the Lake 
St. Clair--St. Clair shorelines.
    With more data, the numbers will change. The magnitude of 
these changes would not be expected to be great, but evaluation 
would be needed to quantify them. Adding more years of data and 
looking at more detailed analysis would always be the preferred 
option.
    Again, thank you for allowing me the opportunity to speak 
with you today, and I will be happy to answer any of your 
questions. Thank you.
    [The prepared statement of Lieutenant Colonel Lauzon 
follows:]
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    Mrs. Miller. Thank you very much. We appreciate that. And 
our next witness is a good friend of this community, long 
time--lived here many, many years and represented this area as 
well, and that is State Senator Jud Gilbert. We appreciate his 
attendance here and how involved he has been for the State 
level. In fact, before he testifies, I notice there are a 
couple of your colleagues out in the audience as well. Let me 
just recognize them quickly. This has been every level of 
government working together at the Federal, the State, the 
local level. I see State Representative Phil Pavlov is in the 
audience. We appreciate your attendance, Representative.
    I see some county commissioners. No one gave me a list. I 
hope I'm not going to miss anybody. I see Pam Wall, County 
Commissioner Pam Wall, and Terry Lundon is with us as well, and 
Jeff Blum I see out in the audience, also and Wally Evans, I 
saw a little bit earlier. So hopefully I have seen all of our 
county commissioners. We appreciate everybody's interest in 
attendance. I hope I didn't miss anyone.
    Senator Gilbert has represented this area, as I said, very 
well in a number of different capacities over the years. Right 
now, as some of you may know, he is the chairperson of Senate 
Committee on Transportation. We have worked together on a lot 
of road projects, funding for the Bluewater Bridge Plaza and 
many other kinds of issues relating to transportation as well. 
He also serves as vice chair for the Senate Committee on 
Agriculture, Forestry and Tourism. He has been very, very 
involved in a number of different community organizations here, 
Optimist Club Youth for Christ, the Algonac Rotary Club, etc. 
We appreciate the Senator's attendance here. The floor is 
yours, sir. We look forward to your testimony.

                  STATEMENT OF JUDSON GILBERT

    Mr. Gilbert. Good morning, Madame Chair and Representative 
Turner. I would like to welcome you to my 25th Senate District 
and my hometown. I have not only lived here many years, it's 
been all my life. It's even longer than that.
    Mrs. Miller. Even longer than many years.
    Mr. Gilbert. Well, many of the points that I want to make 
were touched upon in your opening statement and other 
testimony, and I'm sure Jon Manos will hit on those again. The 
fact that this map will be changed 14 inches I think is 
significant. Those of us who live in the area can't remember 
that water levels have been so low for such a long period of 
time.
    One of the things that I believe is a great injustice is 
the fact that what we are dealing with, on the increased 
floodplain levels, is 20-year-old data. People have made their 
decisions on elevations for their homes, decided where they are 
going to move and all of a sudden, by administrative fiat, they 
are going to be put in this floodplain at considerable expense.
    The point has been made that there is more premiums paid in 
than claims; that we are a donor State. Many of my constituents 
have felt because of FEMA's financial problems, they are coming 
to Michigan where there's very low risk and coming in trying to 
bail out FEMA at this time. And certainly that's not a good 
thing for the people in this community or for the State of 
Michigan.
    This remapping will only increase the amount we pay with 
little or no return to our constituents. Again, the water 
levels are down. Having read several scientific journals on 
this issue, some believe that the historic high levels that we 
have reached in the past will not be reached in the future.
    I believe that you've asked government to look into this 
trend under the Bluewater Bridge, that there is reason to 
believe that water levels are not going to return to historic 
highs but, certainly, I think the big effect is money flowing 
out of Michigan. We all know that we are in a very difficult 
economic situation here in the State of Michigan.
    Our government should be examining ways to alleviate 
financial hardship on your families and businesses, not 
strapping them with unnecessary costs and regulations.
    You see, people are leaving the State of Michigan because 
we are experiencing a one-State recession. Unemployment levels 
are high. Our economy is suffering and these types of 
burdensome fees and hidden taxes are a disincentive for people 
to live in Michigan. Millions are taken away from Michigan 
families when they cannot afford it.
    The impact goes on beyond just having more people purchase 
insurance and subsidizing Federal programs with hard-earned 
dollars.
    You yourself, Madame Chair, made note of this earlier this 
year when you stated on the floor of the U.S. House of 
Representatives since 1978, that was the year Michigan actually 
opted into the program, the people of Michigan have paid $138 
million, and in that same time FEMA has paid out claims 
totaling less than $38 million.
    I may not know everything there is to know about the job 
that FEMA does, but what I know for sure is this: If we were on 
the board of directors of a corporation and we did not give our 
stockholders a fair return on the shares that they bought in 
our company, we would be fired. FEMA is a broken-down company 
that is not giving shareholders their fair return.
    Mr. Manos has suggested and believes that there is 
certainly a rule or a law that perhaps Michigan should opt out 
of this program.
    I believe he pointed out to me that there are several 
States that are not part of the program. I think it would be 
far better for us to have some self-insurance program here in 
the State of Michigan and keep the dollars here in Michigan.
    I guess the thing that really upsets me is that we send 
these dollars, never to return to Michigan and, of course, we 
need more economic activity in Michigan.
    One other point I would like to make, in addition to a 
House resolution, there was a Senate resolution that we passed, 
I think, in the fall of last year. Mr. Manos came up and 
testified at a Banking and Insurance Committee and passed 
unanimously, asking FEMA not to go ahead with these proposed 
increases in elevations, and it also passed the Senate 
unanimously.
    Thank you.
    [The prepared statement of Mr. Gilbert follows:]

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    Mrs. Miller. Thank you very much. We appreciate that.
    Our final witness on our first panel is Supervisor of Clay 
Township, Jon Manos. Mr. Manos has served a total of five 
different terms as supervisor beginning in 1974. So he has 
considerable expertise in regards to the flood insurance 
program and water levels around the area as well. He served as 
township supervisor here during both high-water periods in the 
1970's and 1980's again.
    He also was very involved in administering the original 
Corps of Engineers flood program called Self-help and Operation 
Foresight.
    He served as the State of Michigan's first floodplain 
manager and was a participant in a high-water symposium called: 
A Look at the Land Side Lake Levels held in Grand Rapids.
    Supervisor Manos, we appreciate your gracious hospitality 
hosting this hearing and we look forward to your testimony. The 
floor is yours.

                     STATEMENT OF JON MANOS

    Mr. Manos. I thank you for coming to Clay Township, and 
Representative Turner, to put a different spin, I guess, a 
different perspective on the technical data sector. What we 
like to deal with is how does this thing affect the actual 
people that live here. I think that is very important.
    I would like to present for the record, I have a petition 
signed by over 2,250 residents, property owners, area property 
owners, opposing any elevation change, I have additional 
supportive information, and I also have comparison data, the 
2006 100-year floodplain Rules and Regulations as they relate 
to the 500-year regulation.
    Mrs. Miller. Without objection those will be entered into 
the congressional record of this hearing as well.
    Mr. Manos. Thank you. This is their most recent from Macomb 
County--that the 2006 100-year Floodplain Regulation which will 
be placed for people to read, since they are in there, and this 
reflects what the 500-year floodplain regulations are. At the 
same time many of our residents will be put under that status.
    Mrs. Miller. Thank you.
    Mr. Manos. I'm going to touch for just a second on this 
type of a headline, and it isn't something new. I think we all 
know this. It's in the Detroit papers, it's in Washington 
papers, etc.
    FEMA has a number of problems, but that isn't the main 
issue at this time. This is what I would like to really point 
out to you very briefly, again; lake levels keep falling. This 
data is being put forth many, many times over, every time we 
pick up the newspaper, where is the water going, why is Lake 
Superior 6 years now running below it's long-term average, and 
it's a regulated lake. I don't want to get into this lake up-
and-down issue but nevertheless, this is falling.
    Here is a map of the United States showing the policy, 
growth percentage change for FEMA, produced by FEMA.
    As you can see, all the yellow States, including Michigan, 
California, some of bigger States, all have a negative growth 
rate. That means revenues which sustain FEMA, and it's quoted 
in their own words, that they exist on premiums. The whole 
program is designed for that. These are all negative States 
with growth.
    I even went through and outlined in red for you the ones 
under 2 percent growth, which is nothing. How can you sustain 
FEMA with a negative revenue stream? You can't do it.
    FEMA went broke. Here it is in U.S.A. Today, put out--it 
was on CNN, FEMA halts flood insurance payments. They told 96 
paying agents don't pay legitimate claims. We have no money to 
back you up. They went to Congress and Congress approved, I 
believe, it was something like a loan of $21 or $23 billion to 
go to FEMA.
    If you have a reduced revenue stream at all going down, how 
do you intend to make mortgage payments that are in excess of 
what revenues that are coming in?
    Real brief again, I'm trying to be as brief as I can, FEMA 
takes in $2 million a year nationally.
    When it equates over the period of 27 years, it's about a 
half a billion a year that is spent for actual claims. Where 
does the other billion and a half go? You know where it goes? 
It goes to administer the program. So you have a great amount 
of money and those premiums that's leaving serves no purpose 
for claims. That's a serious thing.
    Now, if you borrow $23 billion, where--how did you pay that 
back? Where does the money really go? Does it go to help people 
that need to have their claims replenished? No. It goes to 
administration. I just want to show you this.
    There is no question about it, FEMA is going out of 
business. The only way they can bring it back is increase the 
floodplain elevation, get into the higher--the 500-year 
floodplain areas where the homes have been built for 30 years.
    Now, I would like to read our statement as quickly as I 
can, and we will answer any questions.
    On behalf of the many affected property owners, and not 
only within Clay Township but within St. Clair County and State 
of Michigan, the township wishes to express its appreciation 
for this opportunity given by the congressional subcommittee to 
hear testimony from concerned property owners, State, county, 
and area-elected officials concerning the impact of FEMA's 
proposed elevation changes and the historic value of the 
national flood insurance program to Michigan since its 
inception.
    Proposed dramatic increases in the 100-year floodplain 
elevation level have prompted the questions of the real intent 
of such an action. There isn't any doubt that updating the 
format of the old paper map using state-of-the-art digital 
technology will bring about major benefit to the property 
owners, as well as the lending institutions and involved 
government agencies.
    Present elevation levels remain constant for 25 years and 
are reflective of two record flooding periods.
    What has surfaced is information from FEMA records that 
indicate the primary reason for raising elevation is to bolster 
declining premium revenues needed to feed the program's growing 
administrative cost.
    The cost-benefit ratio throughout Michigan is ridiculous 
and it has made Michigan a perpetual donor State. I'm not going 
to read FEMA facts, we already did that with the State, what 
have you, what the value is to Clay Township property owners.
    FEMA has been quoted as saying adding more policy holders 
will keep right the flood program financially. All FEMA records 
indicate that the program is broke.
    A quote in U.S. News, government agency has run out of 
funds to cover flood insurance claims and an unprecedented move 
has stopped payment to policy holders.
    FEMA maps showing this growth in the United States 
demonstrates the declining premium base.
    I will move on a little bit from that. We will go with, 
there is an excess of $1.5 billion each program year as an 
average nationally.
    Even with the excess of revenue over claim payments the 
program remains broke and now must pay back $23 billion it just 
borrowed.
    Only one alternative logically exists, and that is to 
incorporate existing structures lying in the unrestricted 500-
year floodplain into the existing premium base.
    Remember these structures have been outside the 
jurisdiction the Army Corps of Engineers and FEMA regulations 
for over 27\1/2\ years.
    And now simply adjusting 20-year-old data to make the shoe 
fit, FEMA gains needed revenue and the Corps now exercises 
regulatory jurisdiction over thousands of properties previously 
exempt. No practical justification can be given for either 
agency to now.
    After 30 years of granting unrestricted compliance to 
thousands of properties, tell their owner to start paying flood 
insurance and accept the fact their structures don't meet the 
new floodplain building standards.
    FEMA has, in effect, created the potential for Michigan 
economic disaster. Who reaps the gain from the 100-year flood 
elevations? Certainly not the homeowner.
    By changing a structure from a conforming status to a 
nonconforming status, the owner definitely becomes a loser. No 
amount of icing by FEMA can change that fact. The owner may 
have to stand the expense of purchasing flood insurance he 
doesn't want.
    The sale value and marketability of the property will 
definitely be negatively affected. Septic tank fields, they 
need to replaced and an entire structure may need to be 
elevated after the incurrence of a casualty loss.
    The cost of new construction will also increase, which may, 
in fact, place the cost of owning a new home out of the reach 
of many families.
    Clay Township is well aware of the flooding of both the 
1970's and 1980's. The township worked with the Army Corps in 
administering the Self-Help and Operation Foresight Programs 
and distributed over 200,000 sandbags.
    The township is also aware of the many studies commissioned 
by the International Joint Commission relating to the inflow 
and outflow regulation of the Great Lakes.
    What was not mentioned a few minutes ago by the Army Corps 
of Engineers was a Great Lakes upper study plan begun in 2001 
at a cost of somewhere around $50 million and is still ongoing 
that deals with the subject matter and reflects numerous 
variables which have to be incorporated into calculations used 
to change 100-year floodplain levels.
    Some of the noted variables: The dramatic increases in use, 
global warming, channel dredging, re-evaluation of existing 
divergence, re-assessing a plan, 1977-A, and Long Lake and 
Ogoki diversion adjustments. The FEMA elevation change proposal 
ignores these as important variables and puts hindsight ahead 
of foresight.
    The point to be made is simple, that the levels in the 
Great Lakes are below long-term average, and Lake St. Clair has 
been predicted to peak at 574.3, over 4 feet below the present 
100-year floodplain level and close to 6 feet from the levels 
proposed by FEMA.
    In conclusion, Clay Township again expresses its 
appreciation for this opportunity to request that FEMA place a 
moratorium on any changes which will elevate the present 
floodplain elevations. Thank you.
    [The prepared statement of Mr. Manos follows:]

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    Mrs. Miller. Thank you very much. We appreciate that.
    Colonel Lauzon and the supervisor didn't want to get too 
much into lake levels and the Army Corps of Engineers' impact 
on some of those things. You and I have been working very 
closely on an issue that I think might have some impact on this 
whole concept of the mapping and what happens. Of course, 
that's with trying to find funding for a 3-D model where you 
would actually construct--the Corps, that they would actually 
construct a 3-D model of the St. Clair River. Because there has 
been a coastal engineering firm--very widely respected that 
recently did a study, they are theorizing that because the St. 
Clair River had extensive dredging in the mid-1970's--excuse 
me, actually 1960's, 1962 to 1964, to open up the upper lakes 
for shipping, because of that dredging, and subsequent 
dredging, and subsequent erosion as well, that you have an 
effect in the St. Clair River almost like a plug in a bathtub 
has been pulled.
    They are theorizing that the amount of water that is going 
through the St. Clair River now because of that action 
interpolates to approximately the size of Lake St. Clair being 
diverted down the Erie Barge Canal out into the Atlantic Ocean 
about every 18 months. We are not sure whether or not that's 
so, but we are trying to get funding to build a 3-D model for 
this.
    I know the Corps has done a similar thing in the 
Mississippi River. If it is so--I won't go into all of the 
other theorems about why the lake levels do fluctuate, but do 
you think if we were able to get the 3-D model and show that 
theorem is correct, that model would have some impact on FEMA 
and the flood insurance rates for the entire region here?
    Colonel Lauzon. Congresswoman, good question. The study 
that you are referring to is, the Upper Lakes Plan Study, and 
the other report that you're referring to is the Bared Report 
that was commissioned by the Georgian Bay Association with 
regard to lower lake levels. In fact, it had--the report stated 
that increased dredging north of--actually, through the Lake 
St. Clair or St. Clair River had an impact on water levels 
flowing out at a considerable rate throughout the basin.
    That report is under review. There are many aspects of that 
report that were not discussed. One is static rebounds, because 
the lakes were formed on a glacier, the lack of rainfall and 
precipitation snowpack on Superior. There are many factors that 
are impacting the water levels, not just the increased 
dredging.
    With regard to your 3-D model, we have a one-dimensional 
model right now that we are using. It's primarily focusing on 
sediment transfer. But as you and I spoke earlier, that 3-D 
model I think would be very beneficial, not only for the lake 
levels as determined by sediment transfer, but also for all 
aspects of how we determine flows of water through the basin, 
where the floods potentially might happen with greater 
fidelity. So we welcome that report. I'm sorry, we welcome that 
model, if we can get funding. I think we have authorization but 
no appropriation, as you are aware. If we can get that 
appropriation, that would be very beneficial.
    If I can just add one other additional thing with regard to 
that. With your leadership, ma'am, the study that you 
introduced before the House Committee Transportation and 
Infrastructure, I think could be also a very good tool that we 
can use.
    As you are aware it did get approved, authorized. That 
could be a tool. In fact, I just have some notes here. But it 
takes a look at--it takes a look at the Corps to conduct a 
study for protection, environmental restoration and protection 
for recreation and related purposes for the Clinton River and 
Anchor Bay watershed. So that would be a great tool as well if 
we can have--continue to have Congress's support to push that 
forward. I think that would be a very big benefit to the local 
communities as well, ma'am.
    Mrs. Miller. I appreciate that.
    Ms. Odeshoo, if I could ask you, you testified that you 
thought--you were looking at a proposal from FEMA to raise base 
flood elevations, put levels at about 6 feet above current lake 
levels in--excuse me, in Lake St. Clair as well, to finish up 
what Colonel Lauzon was just mentioning about snow pack up in 
Lake Superior, and a number of other factors that go into the 
dynamics of why lake levels fluctuate. But for the lake levels 
to raise 6 feet, what did you think would actually have to 
happen to raise a lake level 6 feet?
    Ms. Odeshoo. Congresswoman Miller, I don't know what would 
have to happen to raise the lake level 6 feet. I can tell you 
that that we do know lake levels are--the Great Lakes levels 
are cyclical. They have risen tremendously high. Right now they 
are at a historic low.
    FEMA understands that the issue right now, because the lake 
levels are low, FEMA's responsibility under the National Flood 
Insurance Program is to consider the actual risk. And there is 
an actual risk if those lake levels go up, and it's expected 
they will go up.
    Mrs. Miller. You know, we were also talking about some of 
the various factors that impact, and I know, perhaps, FEMA 
doesn't take this into consideration, but I guess I can ask you 
whether or not you think you might. For instance, talking about 
wave run-up and some of the different things that are not 
considered; the Coast Guard, I think is a doing an 
extraordinary job now of really doing some of the ice cutting 
capabilities that they have along the St. Clair River. We see 
them out during the year.
    Do you use any of those kinds of factors when you think 
about raising the base of the flood elevation either?
    Ms. Odeshoo. We use the best data that is available to us. 
And right now the best data is that available to us is the 1988 
and 1989 Corps studies. I need to emphasize as strongly as I 
can that FEMA will accept and consider any technical, 
scientific or any other data that is provided to us. And it's 
very important that if there is data out there, that we need to 
consider that it be provided to us.
    Mrs. Miller. Senator Gilbert, if a company, an insurance 
company that is licensed to do business in the State of 
Michigan, AAA, or State Farm, or one of the larger insurance 
agencies, if a situation or a scenario was brought forward to 
you, or to the insurance commissioner, some of the details and 
facts that have been pointed out to us today about the 
difference in the amount of claims that are being paid out as 
opposed to the amount of premiums that are being paid in by a 
group of the insured.
    What do you think the response from the State officials 
would to be a private company having this?
    Mr. Gilbert. Well, I see a great disparity between premiums 
and claims because of the regulatory body we have here in the 
State of Michigan. Those premiums will be rolled back and I 
assume since that has not happened necessarily since I've been 
in the legislature that perhaps some money would be refunded to 
those payment premiums. I think that points out very clearly 
what's wrong with this program, that those of us here are very 
little risk have been confronted with additional insurance 
premiums by increasing the flood zone.
    And, again, I think the fact--I don't believe there is 
anybody on the Federal level, other than congressional 
oversight, that is regulating this particular federally agency 
so--but at the State level, there's mechanisms to correct that.
    Mrs. Miller. Ms. Odeshoo, I'm not certain whether any 
particular State has ever opted out of the Federal Flood 
Insurance Program. I'm not sure that we in Michigan are 
prepared to do that either, although I will say it's an option 
that we have had a lot of discussion on and are exploring. And 
part of the purpose of this hearing here today is for us to 
continue to get input and determine whether or not we would 
want to make a recommendation like that to our State Senator, 
make a recommendation like that to the State.
    Are you aware of any other States that have opted out, and 
if I could, I don't know if you can answer this question, but 
if a State was to opt out of the Flood Insurance Program, and 
perhaps self-insure, would that preclude the State from 
availing itself of other Federal disaster moneys? I don't know 
if you could answer that question.
    First of all, if you are aware of any other States that 
have opted out or are considering opting out? Again, since this 
is happening nationwide. I know I have talked to some of my 
colleagues in the coastal States, North Carolina, Florida, have 
seen similar articles that we have seen in our Detroit papers 
are being written by other areas as well as this remapping 
process is happening nationwide.
    Ms. Odeshoo. One moment.
    Mrs. Miller. If you would like to ask her to come up to the 
table to testify.
    Ms. Odeshoo. She didn't swear herself in. I think she can 
help me with this. There have never been States that opted out 
of the program. There have been communities that have opted out 
in terms of self-insurance. That would only apply to State 
agencies. Self-insurance would not apply to individual 
homeowners.
    Our concern with any community opting out of the program, 
I'm sure you are very well aware of repercussions of that, just 
to name a few things. Flood insurance will no longer be 
available and no Federal grants or loans for building in the 
identified areas. Disaster assistance would be omitted, except 
in the case of emergencies and temporary housing and that is a 
huge issue right there in terms of not being able to get 
certain kind of disaster assistance. Federal mortgage insurance 
requires flood insurance. If flood insurance is unavailable, 
Federal mortgage insurance through the FHA, VA, Farmers Home, 
others, would not be available.
    I would advise communities to be very, very cautious about 
opting out of the Flood Insurance Program because of many 
things that would become--many types of assistance that would 
become unavailable to them.
    Mrs. Miller. Thank you.
    Just a final question before I turn to my colleague, 
Representative Turner, for his questions as well.
    I would like to ask the supervisor, since we were both 
supervisors in 1986 when we had the high water, I know the 
kinds of things we were putting in place in Macomb County, and 
some of the areas. I know it was happening all the way up the 
shoreline. What kinds of things have happened in Clay Township, 
just as example for--as you have done your planning, as people 
have come in to even putting on additions onto their homes or 
raising elevations for new building, is there much more 
cognizance of high-water levels and what kind of negative 
impact? If you could talk from a local perspective about that.
    Mr. Manos. I think the Corps of Engineers should recognize 
how many thousands and thousands of seawalls have been put into 
service that are elevated above the 500 or 100-year floodplain 
and what effect they would have over the years, permits had to 
be granted in the floodplain area to fill in properties. Those 
things have all been done in this area.
    There has been a tremendous amount of effort by the people 
to construct at higher levels than what our 100-year 
floodplain--our building inspectors told me that they require 
right now to get that elevation up. But that was based upon the 
established level for the last 27 years that our people have 
built to.
    I have a list, which I have given you in our record that 
was just given to me for the Bluewater Isle. They have 
somewhere around $165 million worth of structure value alone. 
Those areas are basically in the B-zone. They were not required 
and were not restricted in any way. And a lot of those homes 
have been built there in the last 27 years and built according 
to the rules and regulations applied by the Corps of Engineers 
and FEMA, and they were not required and they went in and did 
this and now we are going to come back and tell them, hey, your 
house is not conforming, so on, so forth. We have taken steps. 
I think it's part of the reason between the 1970's and the 
1980's that were weren't as many claims that came through here 
in the 1980's than there were, basically, in the 1970's for the 
flood damage. And these things are records that are on file.
    I don't know why we are sitting here right now and we are 
back talking about this technical data from the Corps of when 
the set-up and what is happening. That is static level in the 
lake, and the Corps knows it as well as I know it. I have gone 
back and I have added the data and it's in those reports.
    And what we did also was submitted to me for Bluewater Isle 
probably about 20 or 30 LOMAs that have been issued in those 
areas over the last several years. Those people now are out of 
the floodplain. They are not required to have mortgages. And we 
have run those elevations and 85 percent of those people that 
just got out are going to be put right back in. And that was 
verified by our building department. It doesn't seem fair. They 
did whatever they had to do. Evaluate, surveys, etc., and all 
of a sudden now, we are going to tell them that 14 inches is 
going to destroy the LOMAs you just got.
    I don't know how we can stand on something that is 27 years 
old, that we have allowed people to build in those areas and 
now we are not protecting the shoreline at all. We should have 
protected the shoreline if we were going to do that some-27 
years ago, when the Corps said they had this technical data and 
they held it in their pockets when we didn't have funds to 
implement it.
    Wait a minute, you put a heck of an economic situation on 
to the poor homeowner that maybe just met a base--just basely 
qualified for that mortgage.
    I have talked to some of the people from our local banks 
and they tell me flat out, some people barely make it, and they 
have a mortgage and they are not in a floodplain. They were 
told they weren't in it. Just going along fine. All of a sudden 
now, this 14-inch elevation will change that and they will now 
be required to come up with this extra money to pay for the 
flood insurance and I, again, don't believe there is 
justification. And that's what we have done locally to do that, 
but as far as--that is an issue that can open the door, and I 
would be happy to do that at another time with the Corps of 
Engineers because I understand what happens at the static level 
and IJC studies will relate to that. They don't want to admit 
it, but it isn't the Corps of Engineers that controls anything 
in the Great Lakes. It's the International Joint Commission. 
They control how much water, how many gates are open up in Lake 
Superior, what the flow will be coming down this way. And in 
1985, in November I believe it was, they opened up everything 
that they had up there. There was an unprecedented amount of 
water. I believe it was 136,000 feet of cubic water a second 
that came down into this basin.
    In the lower end, if they remember, perhaps they forgot, 
but they shot one of the locks down in the Whelan Canal. At the 
same time that water was coming down, they did some adjusting 
on the Detroit--compensating works down in Livingstone Channel. 
They added another, I believe, 2 feet onto that 2,000-foot wall 
to further restrict the water, keeping it up into our basin. 
Those are facts that they can't deny.
    I have a picture of a barge that was left in Lake Erie for 
2 years that was sunk, and they didn't get it out of there. And 
they can tell you how many inches it raised and backed up the 
water into your system.
    All we are saying is there is extenuating circumstances 
that happened to bring those waters as high as they were. And 
then we have a little wind set-up, or something else, in that 
static level, and we are not taking into consideration the new 
studies that deal with consumptive use in the last 20 years, I 
believe, is almost equivalent of what goes out of the Whelan 
Canal.
    Mrs. Miller. All right. Thank you very much, Supervisor 
Manos. We appreciate that information and I turn to my 
colleague, Representative Turner, for his line of questioning 
for the witnesses.
    Mr. Turner. Thank you very much. I want to thank you again 
for holding this hearing and the importance of diving into this 
issue, looking at the data points, what is the impact 
economically on the local community, and how are these programs 
working and how are they serving.
    I note from the information that you have given me that the 
impact on Ohio, as in Michigan, is significant. Total premiums 
paid in Ohio from the period you have identified from 1978 to 
2002 is $204 million. The payments received were $118 million. 
The total net benefit is a negative $85 million compared to--
you were identifying Michigan's negatives as $120 million.
    Premiums in Michigan average $257. Premiums in Ohio average 
$259. The issues appear to be very similar of the net donor 
State status that we have both with Ohio and Michigan.
    You have given me the numbers from my district itself. Here 
in St. Clair County, you have 1,800 total policies in force 
which of course increases if the remapping program goes 
forward.
    In the 3rd District of Ohio, which represents four counties 
that I represent, we have 2,500 policies in effect. It's 
certainly an issue that has great ramification beyond this 
local area.
    The type of testimony you are receiving is the type of 
testimony nationally that can be used to raise the types of 
questions that we need in order to be able to make decisions as 
to how these programs should go forward.
    Ms. Odeshoo, I have a question for you, and I also first 
want to make a positive statement about FEMA. For an 
organization that has received such negative scrutiny as a 
result of its lack of most recent performance, we all do know 
that FEMA has been an organization in the past that has 
operated with the highest intent of making certain that people 
are safe and that it has personnel that are focused in 
responding to emergencies.
    It's certainly unfortunate the agency has come under such a 
high-level of scrutiny with the lack of performance that we saw 
with Katrina and Rita.
    But I'm assuming that with all organizations that come on 
to a critical point, we look only to an increase in emergency 
management response that we learned from this process and the 
agency can be improved. So I do want to thank you for your many 
years of services and for that of FEMA.
    I do want to ask you--an opportunity to answer a positive 
question, even though we see this data information and its 
impact locally, and the negative impacts that it can have, 
certainly there are some positive aspects of having flood 
insurance and you highlighted this a little bit in your opening 
statement. I would like to give you an opportunity to reflect 
on that again.
    I will give you a scenario: if I'm an individual that lived 
across the street from someone and I am not considered to be in 
the flood area and my neighbor across the street is considered 
to be in a flood area, if a flooding situation should occur, 
could you please tell me what the impact would be on me and 
what the impact would be on my neighbor?
    Ms. Odeshoo. Thank you very much, Representative Turner, 
for your nice comments. We don't get a lot of those lately. So 
a pat on the back every so often feels good.
    The person that has flood insurance, obviously, will have a 
lot more benefit than the person who does not, because not 
every flood disaster, in fact the majority of flooding does not 
result in a Federal declaration. So the only assistance that 
many people will get is their flood insurance policies.
    So if you are the person living across the street from the 
person that has flood insurance and both of you flood, 
obviously the person with the flood insurance policy is at the 
greater advantage.
    I might also point out to you that you, being that person 
across the street who doesn't have flood insurance, could still 
purchase flood insurance. Just because you are not designated 
in an identified floodplain, you can purchase flood insurance 
at the lower premium because the risk is lower.
    One thing that I would like to clarify in terms of those 
1988 and 1989 studies, I need to make it very clear that local 
communities were sent a letter by FEMA with copies of those 
studies. And although we didn't have the money at the time to 
revise the maps, the communities were advised to use that 
current information in their future--you know, in all future 
floodplain-management decisions. I want to clarify that. This 
is a very important point to make.
    Did I answer your question? Is there anything further?
    Mr. Turner. Yes, you did. In looking at the numbers we were 
provided, clearly the flood insurance program appears to be 
broken and is not set up to cover its costs. From the 
information we have here, Hurricanes Rita and Katrina alone 
will result in an estimated $23 billion in payments. For the 
entire United States, 2006 premiums total just over $2.2 
billion.
    Obviously, if we both require that premium be paid in and 
then send the difference of the bill to the general taxpayers, 
those that are both paying premiums and don't have a loss are 
paying twice. They are paying both, one, for the premiums they 
are being hit with and where they have not had a loss and, 
second, when the overruns are sent to the general taxpayers at 
large.
    I think that there is an issue of equity and fairness that 
Chairman Miller has certainly identified. I don't think we 
would expect--in any insurance program, there would be hopes 
that the premiums paid in exceed the losses. But here we have a 
situation where the losses exceed the premiums paid in, except 
for in certain local or geographic areas that are bearing the 
weight. That seems to me to be unfair.
    Are you aware of any reviews that are occurring in FEMA, as 
in looking at the issue of the failure of the program to pay 
for itself, and the inequities that are occurring between 
States?
    Ms. Odeshoo. I'm sorry, I really don't have that 
information available. But I would be happy to look into that 
and get back to you for the record.
    My guess is, yes, that's being very closely looked at. And 
I recognize--we all recognize the fact that--I know the numbers 
are clear, we are not denying the numbers, Michigan has paid 
more into the flood insurance program than they have gotten 
back, at least to this point.
    I think I can make an analogy here. First of all, this is 
not revenue producing, most insurance companies are not.
    I think I can make a similar analogy just using myself, or 
yourself. I'm betting that you have paid way more into your 
homeowners than you have taken out of it. The same thing for 
your car insurance.
    We don't need the insurance when we don't need it but when 
we do, hopefully it's there to pay our claims.
    I feel very strongly the risk here in Michigan, it's just a 
matter of time until there is flooding here and those people 
that have paid the premiums in the National Flood Insurance 
Program will get back as much or more, perhaps, as they paid 
in. It's just a matter of time, it happens that way.
    I don't know that for a fact, but I believe in the case of 
Louisiana, they--up until Katrina, they paid way more into the 
Flood Insurance Program than they ever got back in claims. So 
that's something to think about as you consider this issue. 
Excuse me, it was New Orleans, it was the city of New Orleans, 
not the State.
    Mr. Turner. The State had not--Louisiana was not a donor 
State up until at that point?
    Ms. Odeshoo. I don't believe so, the city was. I misspoke.
    Mr. Turner. The analogy there doesn't fit with homeowner's 
insurance because with homeowner's insurance, I pay with an 
expectation if I have a loss, then I will receive a claim, but 
I expect that the total amount of premium that I'm paying will 
be managed by the insurance company to cover the loss spread 
across everyone.
    In this instance, only a small group of people are paying 
premiums. The insurance company here runs into the red and then 
sends the bill to everyone. That isn't the same analogy with 
homeowner's insurance. But I can understand certainly that you 
pay a premium and not everyone experiences a loss.
    But at the same time, this is a program that clearly is not 
being run equitably.
    Colonel Lauzon, my next question is for you. In looking at 
the information we have, it talks about base level being 
raised, and in your testimony, you talk about the wind-
generated waves, the wave run-up caused by the storms. I know 
we are not getting into technical discussion here, but that 
intrigued me. It sounds like even if you add in the issue of 
the new understanding of wave run-up and wind-generated waves, 
you still have a substantial increase in the overall base level 
that is expected of the flood level; is that correct?
    Colonel Lauzon. Yes, sir. It's the same study. But a good 
point to point out, in a 1977 study, there was only 22 years of 
data. We produced the data for a frequency analysis and brought 
in the 1988 data, which had 34 years. That's why you saw the 
growth because the spike was clearly in 1986, and the spike in 
1986 went up to--it actually went up to a--in 1986 it put the 
IGLD over 577, back in 1986.
    So I think the 1977 report was accurate with the data that 
we had up to that point. It's hard to dispute the fact that in 
1986 we had some considerable water levels and some serious 
flooding. That's the difference there between those two.
    Mr. Turner. Senator Gilbert, Chairman Miller made an 
excellent point on the economic impact of the loss of being a 
donor State and Mr. Manos did a great description of impact on 
individuals, their individual budget of receiving a bill, 
specifically of people that had built in an area that was not a 
flood area but now are being placed in a flood area.
    Chairman Miller has made the point of Michigan being a 
donor State of $120 million having been--having left the State 
compared with the numbers that she's provided to me, in Ohio 
it's a negative net of $85 million.
    I was wondering if you might talk for a moment about the 
issue of--it seems to me this is greater than just an issue of 
economic loss of net dollars of the premiums and even a greater 
issue than just those individuals who currently live in flood 
areas. Doesn't this have a negative impact overall on 
development? As we all compete for economic dollars and 
investment in our communities, how does that impact the overall 
area's ability to attract investment?
    Mr. Gilbert. Anytime you raise the cost of people moving, 
in this case I think--economic development, that certainly has 
a negative aspect. If you look at Michigan--49 States are doing 
quite well. We are doing quite poorly exactly.
    And I think every little area we can help improve and make 
Michigan more attractive is very important. This is an area 
that I think needs to be addressed as well. So, I mean, I think 
that's what we need to do is look at this and I think the case 
has been made that this is patently unfair, not only to 
individuals, but to the State of Michigan. And if we can 
correct this, this will certainly encourage economic 
development in the area and the State in general.
    Mrs. Miller. Thank you. I certainly want to thank our first 
panel of witnesses. We are going to have a second panel. And I 
would say, as well, I also want to thank FEMA.
    I know you are under the gun here today. You are used to 
that. You have done great work in the past. I think as we all 
watched Katrina--and I also wanted to mention that, Colonel 
Lauzon, I know you spent quite a bit of time down with Katrina 
and he came back and told us stories of being there. It's 
difficult for any of us--unless you have been there. I have not 
been there personally, but I have heard many stories of 
colleagues, Members of Congress that represent that area, 
people that have been down there--I know the Governor of 
Mississippi, for instance, was telling me 67,000 homes in 
Mississippi were gone. If you can even think about. It's very 
difficult for us to comprehend how devastating all of that was.
    On the other hand, I will also say this, I don't mean not 
to be compassionate but, in Michigan, we look down at the 
water. We don't look up at the water. As the levees--and amount 
of money that we are going to be undertaking as a Nation to 
rebuild those levees, and I know the Corps of Engineers is 
doing what they can, but sometimes, God, I think, will not 
allow man to do certain things to overcome his will and mother 
nature.
    And I hope, as we have investing as a Nation in rebuilding 
in the Gulf, that the next generation there will not curse us 
for allowing them to live under the sea level there. But at any 
rate, we are concerned--we have to approach those kinds of 
things. I think, in my approach, and I think most Members of 
Congress, we approach that with our hearts but we also have to 
approach it with our heads.
    As we look at the inequities that we see in the Flood 
Insurance Program, many of us feel that we are being billed for 
somebody's choice to live looking up at the water.
    When you see the city of New Orleans only about 20 
percent--I'm not sure of the correct figure, 20 percent of the 
structures in the city of New Orleans didn't have flood 
insurance, because the other 80 percent wouldn't take the risk, 
yet we are paying for the risk. I think, again, it's an issue 
of basic fairness.
    At this time, we will take a very brief recess. We want to 
put the second panel in place, and we will excuse the first 
panel and appreciate all of your testimony this morning.
    Thank you very much.
    [Recess.]
    Mrs. Miller. We will call the second panel, subcommittee 
hearing back to report.
    The first witness is Chris Wilson, who has been the city 
manager for Algonac since 2004. And prior to coming to Algonac, 
he worked for the city of Grosse Pointe. He has a Bachelor's 
degree in geography, a Master's degree in political science and 
also a public administration Master's from Wayne State 
University.
    We are certainly delighted to have you with us and the 
floor is yours. We look forward to your testimony.

 STATEMENTS OF CHRIS WILSON, CITY MANAGER OF ALGONAC; MANFRED 
  (WHITEY) SIMON, PRESIDENT, HARSENS ISLAND, ST. CLAIR FLATS 
  ASSOCIATION; AND JOHN COLLISON, OWNER, STERLING REAL ESTATE 
       CO., REPRESENTING MICHIGAN ASSOCIATION OF REALTORS

                   STATEMENT OF CHRIS WILSON

    Mr. Wilson. I would like to thank Madame Chairperson Miller 
and Representative Turner for allowing----
    Mrs. Miller. You can use the mic.
    Mr. Wilson. Given the significant impact these proposed 
measures will have, not only on Algonac or St. Clair County, 
but eventually the entire State of Michigan, as a matter of 
basic equity and fairness it is critical that specific issues 
be considered before such action is taken.
    Primary among these considerations should be whether the 
economic demands being placed on property owners by the Federal 
Government through compulsory purchase of flood insurance is an 
adequate and fair representation of the corresponding level of 
economic risk posed by their decision to locate in a given 
area. It is the position of the city of Algonac that any 
increase in current floodplain levels would cause undue and 
unjustifiable economic harm to the city and its residents.
    Undue hardships that would be placed on the city of Algonac 
as a municipality would be related but not confined to its 
impact on current building codes. An increase in base flood 
elevation would not only impact residents and developers 
seeking to build new structures in the city, existing 
structures that were built in accordance with current elevation 
levels, levels that were developed, approved and sanctioned by 
the Corps of Engineers, would be considered nonconforming. This 
would make additions to or extensive rehabilitation of such 
properties more expensive and less attractive to home and 
business owners. I would like to remind the committee that it 
will become the responsibility of the city of Algonac, as well 
as all other municipalities across the State of Michigan to 
enforce these new regulations. I would not wish upon any 
building or zoning official the day which they must inform an 
enterprising small business owner or a father of a growing 
family of the hardships now enforced upon them because their 
property, which they took care to develop according to 
guidelines established by the Federal Government through the 
Corps of Engineers, is now labeled as nonconforming. Again, it 
is the position of the city of Algonac that in accordance with 
principles of basic and fundamental fairness, such measures be 
taken when, and only when, clear and irrefutable evidence 
exists providing adequate justification.
    Economic hardships will not be limited to owners of new or 
remodeled structures. Algonac has a high number of senior 
citizens. These individuals are likely to own their own home. 
Further, this structure is likely to be the most valuable asset 
in their possession. By adjusting the base flood elevation 
level and classifying their homes as nonconforming, FEMA will 
be adversely impacting the single most valuable possession of 
thousands of elderly homeowners throughout Michigan. The impact 
of this is little different than if the Federal Government were 
to suddenly withdraw a portion of a worker's 401(k) portfolio. 
Again, it is the position of the city of Algonac that before 
such actions are taken, FEMA must assure all involved that the 
economic justifications exist to do so.
    As to whether such justification currently exists, 
significant work has been performed by local officials to 
analyze the risk posed by flooding in the greater Algonac area. 
Further analysis was performed to determine if this risk 
justifies any change in the manner and amount of compensation 
by local property owners. Thorough analysis of the best 
available data justifies a lessening of such burdens as opposed 
to increasing them. This is not to argue with the scientific 
principles behind the Corps' analysis of base flood elevations 
nor the principle behind the establishment of a floodplain. The 
concept of personal responsibility demands that individuals who 
choose to locate in a particular area where flooding poses a 
risk, pay a fair and reasonable amount of compensation to 
protect themselves and others against this risk. However, while 
the science behind the establishment of base flood elevations 
is sound, it does appear that FEMA is using good science to 
implement bad policy.
    The tremendous discrepancies between the amount of policy 
premiums paid by residents of Michigan for FEMA flood insurance 
and the corresponding amount of flood-related claims points 
strongly to such a policy failure. In particular, we feel that 
FEMA should more closely evaluate and analyze the risk posed by 
homes that are constructed in an area that is protected by a 
levee as opposed to those that have no such protection. In the 
calculation of a level of a 100-year floodplain, the goal is to 
appropriately designate such areas that have a 1 percent chance 
each year of being inundated by an adjacent body of water. 
Current base flood elevation levels may accurately reflect such 
levels of risk. However, it is the position of the city of 
Algonac that the manner in which these measurements are 
utilized by FEMA in establishing premium rates does not 
accurately take into account the fundamental differences in 
economic risk posed by the construction of structures in areas 
protected by levees.
    While it is possible that areas around the Great Lakes will 
flood, it is inevitable that structures protected by a levee 
will flood. Further, the nature and scope of flooding that 
occurs in areas behind a levee is far greater and more severe 
than what would occur in an area where no levees exist. By 
treating both areas with and without levees relatively equally 
when it comes to the calculation of flood insurance premiums, 
FEMA is creating a situation where a significant portion of 
property owners are paying rates far higher than their 
accompanying level of risk would demand. Accordingly, others 
with a high risk of economic loss from flooding in terms of 
quantity and scope, are not paying their share relative to 
their level of risk. When the providers of an essential or 
required product in the private sector unfairly manipulate the 
price of their goods or services to the detriment of the 
greater good, we call it price-gouging. I am not sure if such a 
label is appropriate when the same activity is carried out by a 
Federal agency. What I am certain of is that both practices are 
equally reprehensible and both should be prevented whenever 
possible.
    I would like to ask the committee to seriously consider all 
the adverse impacts that an increase in the current base flood 
elevation will have on residents of Algonac and the surrounding 
areas. Before any such attempts as the proposed efforts at 
ecological redlining are attempted, it is imperative the 
Congress use its oversight function to ensure that such actions 
are fair, equitable and necessary. We feel that close 
examination of the greater Algonac area will raise significant 
questions as to the fairness, equity and necessity of such 
actions. Thank you.
    Mrs. Miller. Thank you very much. We appreciate that.
    [The prepared statement of Mr. Wilson follows:]

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    Mrs. Miller. Our next witness is Whitey Simon, president of 
the Harsens Island St. Clair Flats Association. For 30 years 
Mr. Simon was a staff development engineer for General Motors. 
He was also a software engineer at the Bendix Industrial 
Controls Division and field engineer for the missile division 
as well. He's also served our Nation proudly in the armed 
services.
    From the mid to late 1950's, he was the U.S. Air Force 
Staff Sergeant, where he was an instrument flight trainer 
specialist, sort of a remarkable career, Mr. Simon, and today 
you are talking about a subject that strays a bit from that. I 
know you have a lot to tell us about. We look forward to your 
testimony, sir.

                   STATEMENT OF MANFRED SIMON

    Mr. Simon. Thank you, Chairman Miller. And first of all, 
thank you for allowing me to speak on this matter that will 
affect all of us. More importantly, I'm very glad and thankful 
that you came down to this area to hear from people like 
ourselves.
    I will not belabor the points that you so eloquently made 
regarding the economic impact. Our Senator and Mr. Manos and 
Mr. Wilson, again, indicated what will happen economically to 
this area. So I would rather look at what I heard here from 
FEMA and from the Corps.
    I have also heard from both of these organizations that the 
IJC study may or may not be germane. What I would like to 
review for you is the fact that the IJC study clearly indicated 
that several measures which have been identified by the Joint 
Study Commission that could mitigate these high levels were 
never implemented. And the reason they were not implemented was 
that it would cause an economic hardship of some agency 
activity or individuals.
    Well, FEMA has decided who will bear the burden and the 
hardship. Namely, the taxpayers and homeowners of this area.
    Additionally, the young lady from FEMA indicated that we 
are interested in risk management, and the risk models clearly 
indicate that we are supposed to be paying high premiums.
    Unfortunately, if you also look at numbers that indicate 
what the risks have been over the past few years, it clearly 
shows that we pay a disproportionate amount of premiums as to 
the benefits that accrue to us.
    Second, she indicated that she really didn't want to hear 
perhaps about our economic hardships but would be only too 
happy to look at scientific data.
    Well, why in the world won't you, the subcommittee, please 
fund FEMA to go and look at the data to support our contention 
that we probably will not see another high level as we have 
seen before.
    Similarly, the Corps of Engineers clearly indicated that 
there are techniques and technologies available that would 
improve their ability to predict what might happen and 
certainly we all know--I hope we all know studies are designed 
quite often to yield a desired result. That's No. 1.
    And No. 2, quite often the data that is collected and used 
can then support the study. And certainly when looking at the 
numbers, it does not appear that the models have been validated 
by recent 1980, 1990 and 2000 empirical data to give us who 
will bear the burden, the added confidence that FEMA as an 
agency is, in fact, also looking out for our benefits.
    I thank you very much for allowing me to address those 
points and obviously my letter to you in its entirety is a part 
of this record. Thank you.
    Mrs. Miller. Thank you. Without objection, we will enter 
your letter into the congressional record as well. Mr. Simon, 
we appreciate that.
    [The prepared statement of Mr. Simon follows:]

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    Mrs. Miller. And our final witness today is John Collison, 
who is representing the Michigan Association of Realtors.
    Mr. Collison has been licensed as a real estate salesperson 
for 21 years, as a broker for 17 years and as an appraiser for 
14 years. He is currently the owner and broker of Sterling Real 
Estate Co. and he is an owner of Aarmont Appraisal Co. and 
Group as well.
    He also has served on the Board of Directors for the 
National Association of Relators and, of course, the Michigan 
Associational of Relators. He also serves on the board of 
directors for the Metropolitan Association of Relators and is 
the chairperson of the Michigan Council of Real Estate 
Appraisers, which is appraisal section of the Michigan 
Association of Realtors.
    We appreciate Mr. Collison coming today. I might add as 
well, he also grew up on the banks of the Clinton River and has 
watched water levels fluctuate for many, many years, his entire 
life. I appreciate you coming, Mr. Collison, and appreciate 
your testimony, sir.

                   STATEMENT OF JOHN COLLISON

    Mr. Collison. Thank you, Chairman Miller, and I like to 
thank you Representative Turner for this opportunity to--what 
I'm going to basically speak about is two issues that were sort 
of alluded to, on but not really totally described, and this is 
the cost to the owner or the property owner above and beyond 
the cost of the FEMA insurance.
    Obviously, if someone is in a flood zone and they need to 
have FEMA insurance, it's a good investment and it's there as a 
security for the lender to make sure the house doesn't float 
away and they lose their investment.
    However, if it's just there as an arbitrary number, the 
elevation, that really isn't serving its purpose.
    The State of Michigan is a seller disclosure State, where 
if you own a piece of property and you want to sell your house 
and a majority of the States in the United States--I think if 
not all of them, probably at least 90 percent have disclosure 
requirements. If you are owner of a property and you want to 
sell it, you have to tell the potential buyer the condition of 
the property.
    In the Michigan seller disclosure statement, it has two 
questions regarding the septic field. And one of things, 
speaking with Mr. Manos, and getting information from Clay 
Township, a number of septic fields that were built in the 500-
year plain will be out of compliance and nonconforming if the 
change goes into effect and--on the seller disclosure 
statement, it asks two questions about the septic tank and 
drain field. First of all, if it's working, which no matter 
what the floodplain says, if it working, it's working.
    However, under No. 5, question No. 5, it also says, the 
septic tanks and drain field condition, if known.
    If the homeowner knows, and I would assume pretty much 
everybody here would know if their septic field was built for 
the 500-year plain or the 100-year plain, if they know it's out 
of compliance, they have to state that in the seller disclosure 
statement.
    The typical buyer seeing that, and I can't guarantee this 
will happen all of the time, but they probably will request--
they would probably back out of the transaction or request that 
it be upgraded to compliance. That's the normal thing that 
happens in a real estate transaction.
    The seller states: I have this house but it's not really 
complying in what is happening in the current market. The buyer 
will say, yes, that's fine. I will still pay the same amount of 
money I'm going to pay you and bring it into compliance please. 
Now depending on the situation, that could run into thousands 
of dollars in costs.
    The second area I'm going to address as an appraiser, I 
won't make any statement as far as market value because each 
property is unique, every situation is different. I can't say 
with any kind of accuracy whether the change will affect the 
market value of any particular piece of property, however, I 
can say that--I have included the most up to date, what they 
call uniform residential appraisal report in my written 
testimony. It's the Fannie Mae form. It's typically used for 
single-family or residential appraisals.
    Under the section improvements they asked me the question 
as a appraiser, are there any physical deficiencies or adverse 
condition that affect the livability, soundness or structural 
integrity of the property?
    And, yes, is no problem--I mean, yes, is a problem. If I 
hit no, there is no problem, but if I hit yes, I have to 
describe the situation.
    If I know as an appraiser that any part of property is not 
built according--not according to current building codes, I 
have to state that in the report in that area.
    An example would be, say, a home built in 1920 that has 
steam heat, maybe they have asbestos wrapping insulating the 
pipes. I look in the basement, asbestos is only a problem if 
it's deteriorating. It's all wrapped tight and covered, it's 
not problem, I still have to state that in the report, there 
appears to be asbestos in the house.
    If I know that for a fact that the septic field is out of 
compliance, whether it's operable or not, I have to state that 
in the report. Now this would be with a purchase or possibly a 
refinance, anybody looking to get a loan, it may or may not be 
federally insured.
    The question would be, what happens then? That would be 
beyond my scope, that would be the bankers, underwriters and 
people like that would talk about. But I can tell you from 
experience that normally when properties are out of compliance, 
it does--it may or may not adversely affect the person looking 
for refinancing or just purchasing a home, and this has nothing 
to do with the cost of insurance. It has to do with the cost of 
bringing the property into compliance.
    One other example quickly before I finish, the example 
would be if you have a well--you have a private well, but there 
is city water at the street. Quite often the mortgage company 
will require purchaser to tie--even though the well is 
perfectly fine, there is no problem with the water, they will 
require someone, normally the purchaser, to pay the tie-in 
fees, pay the cost for putting the pipe, and all that, just 
because it makes the home more secure. They may or may not 
require someone to upgrade their septic system in the same way 
for the loan.
    Or they may deny the loan or charge higher interest or do 
any number of things. It depends on the underwriting decision 
and guidelines of a particular lender. That's basically what I 
want to say. Thank you very much.
    [The prepared statement of Mr. Collison follows:]

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    Mrs. Miller. Thank you. I appreciate all of your 
testimonies here today. Because of the airplane schedule, I'm 
going to ask Representative Turner to ask his question at this 
time.
    Mr. Turner. Again, I want to thank you for an excellent 
hearing, both the first panel and second panel and certainly 
the community participation you have. This is certainly a great 
hearing you have put together focusing on an issue that is 
truly important.
    So many times when we talk about FEMA and their 
performance, we talk about the issue of emergency preparedness 
but this is one that goes to economics of so many communities.
    The first panel, the Senator who was here testified as to 
the economic impact but, certainly, in this panel we have heard 
the additional economic impacts beyond just the premium, beyond 
just the fact that people will look to an area for investment 
that does not have the addition of this requirement.
    The upgrade that might be required is certainly an 
additional economic burden that I think many times people don't 
consider.
    One of the things I would like to focus on, and all of the 
briefings that we received, and I hear it in each of the 
statements that we're hearing today is that part of, I think, 
the response to this, and the concern is, that this shifts it 
to a mandatory program, whereas people in the 500-year area 
still have the option of participating.
    I would like, if you would, to speak to each of you for a 
moment about the fact that individuals do have the option and 
the difference between the mandatory designation and the option 
availability to--if anyone would like to comment on that. Mr. 
Simon.
    Mr. Simon. I used to pay flood insurance until I finally 
had to upgrade my septic system, at which time I needed an 
elevation certificate. That elevation certificate took me out 
of the 100-year zone and put me above the current level. At 
that time I was no longer required to pay flood insurance. 
Until that time, because of my lender's desire not to lose my 
house, I had to pay this insurance and started to increase to 
the numbers that you see out here as stated as annual premiums.
    Additionally, however, I now do not have it because I'm 
above. My son just moved down the street. As a requirement of 
his mortgage, he has to have flood insurance. If at any time 
the lender thinks that the purchaser has defaulted on that 
payment, he gets a nice letter from the bank indicating that 
they have initiated the purchase of flood insurance for him and 
unless he can demonstrate that he has flood insurance, they 
will take care of it.
    My son received a statement for $3,200 and some dollars in 
flood insurance. And when he contacted his insurance agent, he 
obviously took care of it immediately and it was reduced to 
under $300. So there are some of the requirements that hurt us 
tremendously economically when you fall into that arena where 
you have to--and my son can hardly wait until he can do away 
with that. Thank you.
    Mr. Turner. You were talking about the upgrades, the 
difference between 500-year and 100-year. In 500-year you still 
had the option of having the insurance and at the same time not 
undertaking all of the upgrades, is that----
    Mr. Collison. I don't really want to speak on requirements. 
As an appraiser and a real estate broker, I deal with both 
companies that are covered by federally insured loans and 
private investors, and everybody has different guidelines.
    What Fannie Mae guidelines, federally insured or Freddie 
Mac, they have the guidelines where it might be optional, where 
a private investor, you know, can do whatever they want. It's 
their money. And there are a number of people more and more 
today--I'm sure you hear on the radio all the time, 
advertisements for mortgage companies. We are the best mortgage 
company. We do did this. We do that.
    A lot of those mortgage companies are not federally funded 
or backed. They are just private investors selling bonds on the 
market. They are companies that are using private money and 
they have their own guidelines and every company has different 
guidelines.
    Mr. Turner. Chairman Miller, I want to thank you for 
highlighting this important issue and for having me. It was 
great being here. You do have a beautiful area and I can see 
why you are so proud.
    Mrs. Miller. Thank you very much. Have a safe flight and 
we'll see you in session tomorrow in Washington, DC.
    Let the Representative excuse himself, and I have a couple 
more questions for the witnesses before we conclude here.
    Mr. Collison, I'm aware that the National Association of 
Relators has been quite critical of FEMA's management of the 
Flood Insurance Program. Do you have any thoughts about what 
they might do to make it more actuarially sound or to make it 
more fair, particularly for States like Michigan?
    As been pointed out, it's not just Michigan. I think that's 
perhaps why your national association has made some comments 
about it. If you think the entire Great Lakes basin, 
Representative Turner represented Ohio but I have heard from 
others of my colleagues from New York and Illinois and 
Minnesota, etc., other States as well, do you have any comment 
on what the national association's position has been?
    Mr. Collison. They have been supportive of the remapping 
because the old maps are quite frankly, you know, they are 
completely, totally out of date. But, again, they want to make 
sure that, you know, things are done in a fair and equitable 
manner.
    One of the things--I mean, one of my personal concerns is 
that so much of the flooding that we might experience in the 
Great Lakes States is controlled.
    I mean, as was stated in earlier testimony, it depends how 
much water is--if somebody wants to let more water out of Lane 
Superior, we flood down here. Or if they to want to tie it up 
farther down the line, we back up here. And where I think the 
intent of FEMA was, to me, as an individual, is to prevent--
insure people against natural disasters. When you have massive 
flooding on the Mississippi River and it overflows and goes 
over the levees when it's below sea level or below river level. 
They artificially created land where it wasn't before.
    And here in Michigan, what happens is a Federal agency or 
some government group decides, well, we are going to turn off 
the water here or there, that creates a flood situation as 
opposed to natural occurrence. I think FEMA doesn't consider 
that. And I think it's definitely--that's their main problem 
that I have with them.
    Mrs. Miller. Mr. Wilson, can you talk specifically about 
what you might envision as city engineer here for the Township 
of Clay, or all the municipalities I suppose along here, if 
FEMA's proposal is actually finalized, what kind of things you 
might see happening here.
    Mr. Wilson. Chairman Miller, as I alluded to in my 
comments, it is ultimately the responsibility of the 
municipalities to enforce the regulations that are passed down 
from FEMA and Corps of Engineers.
    I have great sympathy for the building inspectors who will 
be forced now to visit people's properties. Somebody wants to 
put in, say, an addition to their house, and they did take care 
to build their property in accordance with the base elevation 
level that has been in place, Mr. Manos said, for over 27\1/2\ 
years now. Now we have to go and tell them their property is 
not complying, or you're going to have to raise your addition 
higher than the rest of your house or you aren't going to be 
able to do it. All of these regulations fall back on the 
municipality to enforce and that is a tremendous burden and 
real hidden cost. We have no control over how the base level 
elevation is set.
    I appreciate the opportunity to testify to bring out the 
importance of this matter, decisions that are made at levels 
higher than the local level, how much of an impact that has 
upon us, we will be the ultimate enforcer of that, not the 
Corps or FEMA. It places a tremendous burden. Code enforcement 
and building code enforcement is not the most popular job in 
the world anyway. We don't need any help making ourselves 
unpopular from outside Federal agencies.
    Mrs. Miller. I appreciate that having, again, been involved 
at the township level for many years. That is absolutely true.
    Mr. Simon, I understand you are on the homeowner 
association--I don't know if it's the larger but certainly one 
of the largest homeowner associations----
    Mr. Simon. We claim to.
    Mrs. Miller. I believe it to be so because you are under 
oath. We will hold you to that.
    Have you--as we said, it just doesn't impact this immediate 
area, it's impacting waterfronts and municipalities and 
homeowner associations around the basin, all over the Nation. 
I'm just wondering if you have had any conversation with some 
of the other homeowner associations around the area, or 
wherever, about how it might impact them.
    This is a very vocal group here but it's not just us, it's 
not just particularly inherent to us. It is impacting other 
people. Have you had conversations with other people, other 
associations?
    Mr. Simon. I have had conversations with individuals that 
have properties in other areas along the shoreline of the State 
but our real concern has been the item. We are a delta. We 
understand that we are surrounded by water but, unfortunately, 
we also sit in an area where probably high water that could 
reach flood stage level doesn't impact us until either we got 
an ice jam or a freighter comes by and churns up the water in 
addition to that, and those then are impacts that FEMA does not 
really insure.
    So, our concern is, just that we are, as was indicated by 
everyone here, we are only donating money.
    I have attempted to find out and nobody apparently keeps 
records down to detail how much money has been paid out in ZIP 
48028. And I can't find out. But there are individuals on the 
island who claim to have submitted a claim to FEMA and were 
denied any payments. So, I don't know anyone who--even in 1986 
did, in fact, get any payment because the water level only came 
up to just below the floor joists.
    Mrs. Miller. Before we conclude here, sometimes I'm not 
sure which questions to be asking, and you all have your area 
of expertise. If there is any questions of myself or the panel 
has not asked, if you want to have any other input for the 
congressional record here as we take this testimony back to 
Washington, please feel free to comment openly if there is 
something that we need to be made aware of.
    Mr. Wilson. Thank you, Madame Chairman. I did find your 
comments about the fact here in Michigan we do look down at the 
water very insightful. As you begin to analyze the actual 
levels of risk that are in effect here in Michigan as opposed 
to other areas of the country, our level is quite low. And I 
alluded to it in my testimony. There needs to be strong 
consideration by FEMA given to the nature and scope of flooding 
that will occur in areas that are protected by a levee.
    If water elevations here--whatever the base level is, 
assume house level, that's eclipsed by 1 foot, you are going to 
have maybe 6 inches of water in someone's home.
    If a 20-foot levee gets eclipsed by 1 foot, you will have 
19 feet of water in somebody's home. There is a fundamental 
difference in flooding risk in areas that are protected.
    I would like the committee to take--and FEMA to take 
further care to analyze risk accordingly. Thank you.
    Mrs. Miller. OK. Thank you.
    Mr. Simon. I would only add to that comment, this risk 
analysis and the risk model I do not believe has been updated 
with empirical data and I would like to ask the committee 
clearly to extend the time before FEMA makes that decision so 
that you can include the latest data, namely the numbers 
between 1988 and 2006 so that they become part of both the 
Corps' models and FEMA's models.
    Unfortunately, I have seen too many models, and the 
examples abound where studies have been used by various 
agencies, and it's in my report to you, where 1 day, we are 
told smoking is bad for you. The next day we are told smoking 
is good for you. One day we are told the pills are good for you 
and the next day the pills are bad. I would request that you 
appoint someone realistically to look at and evaluate the 
studies both of the Corps and the of FEMA. Thank you.
    Mrs. Miller. Thank you. Mr. Collison.
    Mr. Collison. I would like to see--my final comment is, I 
would like to see FEMA go more to the typical insurance model 
where the people in the highest risk areas pay the highest 
premiums and people in the lower risk areas pay lower premiums.
    Where we are getting back maybe 10 cents on the dollar, 
maybe 20 cents on the dollar, possibly just in general the 
premiums in this area could be reduced by 80 percent. Then 
where you have areas of repetitive loss, every 5 years they 
have to file a claim, obviously I believe they should be paying 
greater--it's just like with car insurance. If you are in an 
area where half the people in the city get their cars stolen, 
you will pay higher fees than if you are in an area where it 
never happens. I think the same model could be put to the FEMA 
program.
    Mrs. Miller. I certainly appreciate all of your testimony 
today. We know everybody has a busy schedule. Again, we 
appreciate the hospitality of Clay Township for hosting the 
subcommittee today. It really has been, I thought, very, very 
interesting testimony. I have been trying to follow this issue 
closely. I certainly have learned a lot today and I have a lot 
to think about. I know Representative Turner does as well, and 
we will discuss it with the full committee when we go back to 
Washington.
    Let me thank my subcommittee staff who orchestrated this 
entire event, and then put it all together. Erik Glavich was a 
resident of Michigan until he moved out to Washington, DC. He 
had no trouble coming back for this hearing today. He was happy 
to come back to Michigan for today. I appreciate everybody's 
attendance very much, and with that the committee will be 
adjourned.
    [Whereupon, at 11:15 a.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
follows:]

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