NU Online News Service, May 25, 8:35 a.m.EDT

Industry officials believe the House will accept the 60-dayNational Flood Insurance Program extension the Senate passedyesterday, but an ultimatum in that bill could give the Housepause.

Through a resolution that had to be passed by unanimous consent(H.R. 5740), the Senate effectively told the House that to gain anextension of the existing program through July 31, it had to accepta provision requiring the phase out of subsidies for second homesand vacation homes over four years.

The provision goes into effect July 1, and will become permanentlaw if the House approves the Senate action regardless of what isincluded in any final NFIP reauthorization legislation.

The requirement that subsidies for second homes and vacationproperties be phased out over the four years was the price forcedon the Senate by Sen. Tom Coburn, R-Okla., because under Senaterules, action on a bill must be delayed three days from itsintroduction unless there is unanimous consent.

Coburn refused to provide that consent unless the provision wasincluded.

Coburn argued that after a series of extensions, reforms to theprograms should start to be included in the extensionsthemselves.

"It's either going to be permanent or we are not going to have aflood extension," Coburn told Roll Call Thursday in abreak of negotiations with Sen. Harry Reid, D-Nev., Senate majorityleader, and other members of the Senate.

The House will be required to accept the Senate language when itreturns May 30 from its Memorial Day recess or risk suspension ofthe program just as the hurricane season is about to begin.

The Senate passed its 60-day extension to allow time for it totake action on its five-year-extension bill, S.1940, which wouldalso tighten some mapping rules and provide a road for the privatemarket to participate in the NFIP by giving the NFIP's managers theauthority to buy reinsurance on potential claims.

The bill also calls for a study on how the private market couldplay a larger role in the program.

 Two industry officials say they believe the Housewould accept the Senate bill, but acknowledged that they couldn'tassure House action.

Ray Lehmann, deputy director of the R Street Institute, whichadvises the industry catastrophe issues, says, "The House has avery limited window to act on the temporary extension, and thusmight be forced to agree to language they would otherwise not findacceptable."

An industry lobbyist involved in the talks who asked not to beidentified, agrees.

"I think the House will accept the 60-day extension that justcleared the Senate," he says. "Members don't want to have a lapseand they don't want to be seen as supporting 'subsidies' forvacation homeowners," he says.

On the five-year bill, the lobbyist says that "if it gets to theSenate floor it will pass [both chambers] easily and everyoneagrees that there are no 'deal breaking' issues that can't beresolved in conference."

Updated with bill number of the Senate's 60-dayextension.