Senate Approves Additional Funding for Cerro Grande Fire Claims

The Senate approved fiscal year 2004 funding for the Department of Homeland Security (DHS), containing just over $38 million in funding for the payment of Cerro Grande fire claims.

“The National Association of Independent Insurers (NAII) applauds Sen. Pete Domenici (R-N.M.) for his continuing tenacity in attempting to secure the funding necessary to help pay off all valid Cerro Grande fire claims including subrogation claims,” said Carl Parks, senior vice president, government relations.

The Office of Cerro Grande Fire Claims, formerly part of the Federal Emergency Management Agency, is now part of DHS’ Emergency Preparedness and Response (EP&R) Directorate. While EP&R estimates the need for an additional $45 million to close out the program, the most recent audit by the General Accounting Office (GAO) put the necessary sum at approximately $38 million.

In spite of the efforts of Sen. Domenici, a long time vocal advocate on behalf of the claims’ payments, the Senate Appropriations Committee reportedly used the GAO figure in its bill. Budgetary constraints facing the government made the lower estimate reportedly more attractive for funding purposes.

The bill contains $38,062,000 in monies for payment of Cerro Grande fire claims and provides that up to five million of the sum may be used to cover administrative costs of the program. Efforts continue in the process to obtain updated funding estimates before the final legislation passes Congress to determine whether the current figure in the bill must be increased.

“It is unclear at this point whether the $45 million figure would even prove sufficient to cover all outstanding valid claims, therefore, NAII will continue to work with Sen. Domenici to assure adequate funding is available and all valid claims are paid,” added Parks.

The initial fund was established because on May 4, 2000, the National Park Service lost control of a prescribed burn in the Bandelier National Monument in New Mexico. The fire raged out of control and destroyed more than 425 homes in the community of Los Alamos, New Mexico. The federal government assumed full responsibility for the catastrophe and the severe property damage caused by the fire. Shortly following the catastrophe, legislation was signed into law providing full compensation of property losses and personal injury caused by the fire, including subrogation of insurance claims paid to the fire victims. Additional Cerro Grande Fire funds became necessary because of unexpected claims for smoke and flood damage resulting from the fires. The federal government assumed responsibility for the losses.