[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 2238 Reported in Senate (RS)]






                                                       Calendar No. 513
108th CONGRESS
  2d Session
                                S. 2238

                          [Report No. 108-262]

 To amend the National Flood Insurance Act of 1968 to reduce losses to 
  properties for which repetitive flood insurance claim payments have 
                               been made.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 25, 2004

 Mr. Bunning (for himself, Mr. Shelby, Mr. Sarbanes, Mr. Schumer, Mrs. 
Dole, Mr. Hagel, Ms. Mikulski, Mr. Miller, Mr. Allard, and Mr. Johnson) 
introduced the following bill; which was read twice and referred to the 
            Committee on Banking, Housing, and Urban Affairs

                              May 13, 2004

                Reported by Mr. Shelby, with amendments
  [Omit the part struck through and insert the part printed in italic]

_______________________________________________________________________

                                 A BILL


 
 To amend the National Flood Insurance Act of 1968 to reduce losses to 
  properties for which repetitive flood insurance claim payments have 
                               been made.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Flood Insurance 
Reform Act of 2004''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Congressional findings.
           TITLE I--AMENDMENTS TO FLOOD INSURANCE ACT OF 1968

Sec. 101. Extension of program and consolidation of authorizations.
Sec. 102. Establishment of pilot program for mitigation of severe 
                            repetitive loss properties.
Sec. 103. Amendments to existing flood mitigation assistance program.
Sec. 104. FEMA authority to fund mitigation activities for individual 
                            repetitive claims properties.
Sec. 105. Amendments to additional coverage for compliance with land 
                            use and control measures.
Sec. 106. Actuarial rate properties.
Sec. 107. Geospatial digital flood hazard data.
Sec. 108. Replacement of mobile homes on original sites.
Sec. 109. Reiteration of FEMA responsibility to map mudslides.
                   TITLE II--MISCELLANEOUS PROVISIONS

Sec. 201. Definitions.
Sec. 202. Supplemental forms.
Sec. 203. Acknowledgement form.
Sec. 204. Flood insurance claims handbook.
Sec. 205. Appeal of decisions relating to flood insurance coverage.
Sec. 206. Study and report on use of cost compliance coverage.
Sec. 207. Minimum training and education requirements.
Sec. 208. GAO study and report.
Sec. 209. Prospective payment of flood insurance premiums.
Sec. 210. Report on changes to fee schedule or fee payment 
                            arrangements.

SEC. 2. CONGRESSIONAL FINDINGS.

    The Congress finds that--
            (1) the national flood insurance program--
                    (A) identifies the flood risk;
                    (B) provides flood risk information to the public;
                    (C) encourages State and local governments to make 
                appropriate land use adjustments to constrict the 
                development of land which is exposed to flood damage 
                and minimize damage caused by flood losses; and
                    (D) makes flood insurance available on a nationwide 
                basis that would otherwise not be available, to 
                accelerate recovery from floods, mitigate future 
                losses, save lives, and reduce the personal and 
                national costs of flood disasters;
            (2) the national flood insurance program insures 
        approximately 4,400,000 policyholders;
            (3) approximately 48,000 properties currently insured under 
        the program have experienced, within a 10-year period, 2 or 
        more flood losses where each such loss exceeds the amount 
        $1,000;
            (4) approximately 10,000 of these repetitive-loss 
        properties have experienced either 2 or 3 losses that 
        cumulatively exceed building value or 4 or more losses, each 
        exceeding $1,000;
            (5) repetitive-loss properties constitute a significant 
        drain on the resources of the national flood insurance program, 
        costing about $200,000,000 annually;
            (6) repetitive-loss properties comprise approximately 1 
        percent of currently insured properties but are expected to 
        account for 25 to 30 percent of claims losses;
            (7) the vast majority of repetitive-loss properties were 
        built before local community implementation of floodplain 
        management standards under the program and thus are eligible 
        for subsidized flood insurance;
            (8) while some property owners take advantage of the 
        program allowing subsidized flood insurance without requiring 
        mitigation action, others are trapped in a vicious cycle of 
        suffering flooding, then repairing flood damage, then suffering 
        flooding, without the means to mitigate losses or move out of 
        harm's way;
            (9) mitigation of repetitive-loss properties through 
        buyouts, elevations, relocations, or flood-proofing will 
        produce savings for policyholders under the program and for 
        Federal taxpayers through reduced flood insurance losses and 
        reduced Federal disaster assistance;
            (10) a strategy of making mitigation offers aimed at high-
        priority repetitive-loss properties and shifting more of the 
        burden of recovery costs to property owners who choose to 
        remain vulnerable to repetitive flood damage can encourage 
        property owners to take appropriate actions that reduce loss of 
        life and property damage and benefit the financial soundness of 
        the program;
            (11) the method for addressing repetitive-loss properties 
        should be flexible enough to take into consideration legitimate 
circumstances that may prevent an owner from taking a mitigation 
action; and
            (12) focusing the mitigation and buy-out of repetitive loss 
        properties upon communities and property owners that choose to 
        voluntarily participate in a mitigation and buy-out program 
        will maximize the benefits of such a program, while minimizing 
        any adverse impact on communities and property owners.

           TITLE I--AMENDMENTS TO FLOOD INSURANCE ACT OF 1968

SEC. 101. EXTENSION OF PROGRAM AND CONSOLIDATION OF AUTHORIZATIONS.

    (a) Borrowing Authority.--The first sentence of section 1309(a) of 
the National Flood Insurance Act of 1968 (42 U.S.C. 4016(a)), is 
amended by striking ``through December'' and all that follows through 
``, and'' and inserting ``through the date specified in section 1319, 
and''.
    (b) Authority for Contracts.--Section 1319 of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4026), is amended by striking 
``after'' and all that follows and inserting ``after September 30, 
2008.''.
    (c) Emergency Implementation.--Section 1336(a) of the National 
Flood Insurance Act of 1968 (42 U.S.C. 4056(a)), is amended by striking 
``during the period'' and all that follows through ``in accordance'' 
and inserting ``during the period ending on the date specified in 
section 1319, in accordance''.
    (d) Authorization of Appropriations for Studies.--Section 1376(c) 
of the National Flood Insurance Act of 1968 (42 U.S.C. 4127(c)), is 
amended by striking ``through'' and all that follows and inserting 
``through the date specified in section 1319, for studies under this 
title.''.

SEC. 102. ESTABLISHMENT OF PILOT PROGRAM FOR MITIGATION OF SEVERE 
              REPETITIVE LOSS PROPERTIES.

    (a) In General.--The National Flood Insurance Act of 1968 is 
amended by inserting after section 1361 (42 U.S.C. 4102) the following:

``SEC. 1361A. PILOT PROGRAM FOR MITIGATION OF SEVERE REPETITIVE LOSS 
              PROPERTIES.

    ``(a) Authority.--To the extent amounts are made available for use 
under this section, the Director may, subject to the limitations of 
this section, provide financial assistance to States and communities 
for taking actions with respect to severe repetitive loss properties 
(as such term is defined in subsection (b)) to mitigate flood damage to 
such properties and losses to the National Flood Insurance Fund from 
such properties.
    ``(b) Severe Repetitive Loss Property.--For purposes of this 
section, the term `severe repetitive loss property' has the following 
meaning:
            ``(1) Single-family properties.--In the case of a property 
        consisting of 1 to 4 residences, such term means a property 
        that--
                    ``(A) is covered under a contract for flood 
                insurance made available under this title; and
                    ``(B) has incurred flood-related damage--
                            ``(i) for which 3 or more separate claims 
                        payments have been made under flood insurance 
                        coverage under this title, with the amount of 
                        each such claim exceeding $3,000, and with the 
                        cumulative amount of such claims payments 
                        exceeding $15,000; or
                            ``(ii) for which at least 2 separate claims 
                        payments have been made under such coverage, 
                        with the cumulative amount of such claims 
                        exceeding the value of the property.
            ``(2) Multifamily properties.--In the case of a property 
        consisting of 5 or more residences, such term shall have such 
        meaning as the Director shall by regulation provide.
    ``(c) Eligible Activities.--Amounts provided under this section to 
a State or community may be used only for the following activities:
            ``(1) Mitigation activities.--To carry out mitigation 
        activities that reduce flood damages to severe repetitive loss 
        properties, including elevation, relocation, demolition, and 
        floodproofing of structures, and minor physical localized flood 
        control projects, and the demolition and rebuilding of 
        properties to at least 1 foot above Base Flood Elevation or 
        greater, if required by any local ordinance.
            ``(2) Purchase.--To purchase severe repetitive loss 
        properties, subject to subsection (f).
    ``(d) Matching Requirement.--
            ``(1) In general.--Except as provided in paragraph (2), in 
        any 1-year period the Director may not provide assistance under 
        this section to a State or community in an amount exceeding 3 
        times the amount that the State or community certifies, as the 
        Director shall require, that the State or community will 
        contribute from non-Federal funds for carrying out the eligible 
        activities to be funded with such assistance amounts.
            ``(2) Reduced community match.--With respect to any 1-year 
        period in which assistance is made available under this 
        section, the Director may adjust the contribution required 
        under paragraph (1) by any State, and for the communities 
        located in that State, to not less than 10 percent of the cost 
        of the activities for each severe repetitive loss property for 
        which grant amounts are provided if, for such year--
                    ``(A) the State has an approved State mitigation 
                plan meeting the requirements for hazard mitigation 
                planning under section 322 of the Robert T. Stafford 
                Disaster Relief and Emergency Assistance Act (42 U.S.C. 
                5165) that specifies how the State intends to reduce 
                the number of severe repetitive loss properties; and
                    ``(B) the Director determines, after consultation 
                with the State, that the State has taken actions to 
                reduce the number of such properties.
            ``(3) Non-federal funds.--For purposes of this subsection, 
        the term `non-Federal funds' includes State or local agency 
        funds, in-kind contributions, any salary paid to staff to carry 
        out the eligible activities of the recipient, the value of the 
        time and services contributed by volunteers to carry out such 
activities (at a rate determined by the Director), and the value of any 
donated material or building and the value of any lease on a building.
    ``(e) Standards for Mitigation Offers.--The program under this 
section for providing assistance for eligible activities for severe 
repetitive loss properties shall be subject to the following 
limitations:
            ``(1) Priority.--In determining the properties for which to 
        provide assistance for eligible activities under subsection 
        (c), the Director shall provide assistance for properties in 
        the order that will result in the greatest amount of savings to 
        the National Flood Insurance Fund in the shortest period of 
        time.
            ``(2) Offers.--The Director shall provide assistance in a 
        manner that permits States and communities to make offers to 
        owners of severe repetitive loss properties to take eligible 
        activities under subsection (c) as soon as practicable.
            ``(3) Notice.--Upon making an offer to provide assistance 
        with respect to a property for any eligible activity under 
        subsection (c), the State or community shall notify each holder 
        of a recorded interest on the property of such offer and 
        activity.
    ``(f) Purchase Offers.--A State or community may take action under 
subsection (c)(2) to purchase a severe repetitive loss property only if 
the following requirements are met:
            ``(1) Use of property.--The State or community enters into 
        an agreement with the Director that provides assurances that 
        the property purchased will be used in a manner that is 
        consistent with the requirements of section 404(b)(2)(B) of the 
        Robert T. Stafford Disaster Relief and Emergency Assistance Act 
        (42 U.S.C. 5170c(b)(2)(B)) for properties acquired, accepted, 
        or from which a structure will be removed pursuant to a project 
        provided property acquisition and relocation assistance under 
        such section 404(b).
            ``(2) Offers.--The Director shall provide assistance in a 
        manner that permits States and communities to make offers to 
        owners of severe repetitive loss properties and of associated 
        land to engage in eligible activities as soon as possible.
            ``(3) Purchase price.--The amount of purchase offer is not 
        less than the greatest of--
                    ``(A) the amount of the original purchase price of 
                the property, when purchased by the holder of the 
                current policy of flood insurance under this title;
                    ``(B) the total amount owed, at the time the offer 
                to purchase is made, under any loan secured by a 
                recorded interest on the property; and
                    ``(C) an amount equal to the fair market value of 
                the property immediately before the most recent flood 
                event affecting the property, or an amount equal to the 
                current fair market value of the property.
            ``(4) Comparable housing payment.--If a purchase offer made 
        under paragraph (2) is less than the cost of the homeowner-
        occupant to purchase a comparable replacement dwelling outside 
        the flood hazard area in the same community, the Director shall 
        make available an additional relocation payment to the 
        homeowner-occupant to apply to the difference.
    ``(g) Increased Premiums in Cases of Refusal To Mitigate.--
            ``(1) In general.--In any case in which the owner of a 
        severe repetitive loss property refuses an offer to take action 
        under paragraph (1) or (2) of subsection (c) with respect to 
        such property, the Director shall--
                    ``(A) notify each holder of a recorded interest on 
                the property of such refusal; and
                    ``(B) notwithstanding subsections (a) through (c) 
                of section 1308, thereafter the chargeable premium rate 
                with respect to the property shall be the amount equal 
                to 150 percent of the chargeable rate for the property 
                at the time that the offer was made, as adjusted by any 
                other premium adjustments otherwise applicable to the 
                property and any subsequent increases pursuant to 
                paragraph (2) and subject to the limitation under 
                paragraph (3).
            ``(2) Increased premiums upon subsequent flood damage.--
        Notwithstanding subsections (a) through (c) of section 1308, if 
        the owner of a severe repetitive loss property does not accept 
        an offer to take action under paragraph (1) or (2) of 
        subsection (c) with respect to such property and a claim 
        payment exceeding $1,500 is made under flood insurance coverage 
        under this title for damage to the property caused by a flood 
        event occurring after such offer is made, thereafter the 
        chargeable premium rate with respect to the property shall be 
        the amount equal to 150 percent of the chargeable rate for the 
        property at the time of such flood event, as adjusted by any 
        other premium adjustments otherwise applicable to the property 
        and any subsequent increases pursuant to this paragraph and 
        subject to the limitation under paragraph (3).
            ``(3) Limitation on increased premiums.--In no case may the 
        chargeable premium rate for a severe repetitive loss property 
        be increased pursuant to this subsection to an amount exceeding 
        the applicable estimated risk premium rate for the area (or 
        subdivision thereof) under section 1307(a)(1).
            ``(4) Treatment of deductibles.--Any increase in chargeable 
        premium rates required under this subsection for a severe 
        repetitive loss property may be carried out, to the extent 
        appropriate, as determined by the Director, by adjusting any 
        deductible charged in connection with flood insurance coverage 
        under this title for the property.
            ``(5) Notice of continued offer.--Upon each renewal or 
        modification of any flood insurance coverage under this title 
        for a severe repetitive loss property, the Director shall 
        notify the owner that the offer made pursuant to subsection (c) 
        is still open.
            ``(6) Appeals.--
                    ``(A) In general.--Any owner of a severe repetitive 
                loss property may appeal a determination of the 
                Director to take action under paragraph (1)(B) or (2) 
                with respect to such property, based only upon the 
                following grounds:
                            ``(i) As a result of such action, the owner 
                        of the property will not be able to purchase a 
                        replacement primary residence of comparable 
                        value and that is functionally equivalent.
                            ``(ii) Based on independent information, 
                        such as contractor estimates or appraisals, the 
                        property owner believes that the price offered 
                        for purchasing the property is not an accurate 
                        estimation of the value of the property, or the 
                        amount of Federal funds offered for mitigation 
                        activities, when combined with funds from non-
                        Federal sources, will not cover the actual cost 
                        of mitigation.
                            ``(iii) As a result of such action, the 
                        preservation or maintenance of any prehistoric 
                        or historic district, site, building, 
                        structure, or object included in, or eligible 
                        for inclusion in, the National Register of 
                        historic places will be interfered with, 
                        impaired, or disrupted.
                            ``(iv) The flooding that resulted in the 
                        flood insurance claims described in subsection 
                        (b)(2) for the property resulted from 
                        significant actions by a third party in 
                        violation of Federal, State, or local law, 
                        ordinance, or regulation.
                            ``(v) In purchasing the property, the owner 
                        relied upon flood insurance rate maps of the 
                        Federal Emergency Management Agency that were 
                        current at the time and did not indicate that 
                        the property was located in an area having 
                        special flood hazards.
                    ``(B) Procedure.--An appeal under this paragraph of 
                a determination of the Director shall be made by 
                filing, with the Director, a request for an appeal 
                within 90 days after receiving notice of such 
                determination. Upon receiving the request, the Director 
                shall select, from a list of independent third parties 
                compiled by the Director for such purpose, a party to 
                hear such appeal. Within 90 days after filing of the 
                request for the appeal, such third party shall review 
                the determination of the Director and shall set aside 
                such determination if the third party determines that 
                the grounds under subparagraph (A) exist. During the 
                pendency of an appeal under this paragraph, the 
                Director shall stay the applicability of the rates 
                established pursuant to paragraph (1)(B) or (2), as 
                applicable.
                    ``(C) Effect of final determination.--In an appeal 
                under this paragraph--
                            ``(i) if a final determination is made that 
                        the grounds under subparagraph (A) exist, the 
                        third party hearing such appeal shall make a 
                        determination of how much to reduce the 
                        chargeable risk premium rate for flood 
                        insurance coverage for the property involved in 
                        the appeal from the amount required under 
                        paragraph (1)(B) or (2) and the Director shall 
                        promptly reduce the chargeable risk premium 
                        rate for such property by such amount; and
                            ``(ii) if a final determination is made 
                        that the grounds under subparagraph (A) do not 
                        exist, the Director shall promptly increase the 
                        chargeable risk premium rate for such property 
                        to the amount established pursuant to paragraph 
                        (1)(B) or (2), as applicable, and shall collect 
                        from the property owner the amount necessary to 
                        cover the stay of the applicability of such 
                        increased rates during the pendency of the 
                        appeal.
                    ``(D) Costs.--If the third party hearing an appeal 
                under this paragraph is compensated for such service, 
                the costs of such compensation shall be borne--
                            ``(i) by the owner of the property 
                        requesting the appeal, if the final 
                        determination in the appeal is that the grounds 
                        under subparagraph (A) do not exist; and
                            ``(ii) by the National Flood Insurance 
                        Fund, if such final determination is that the 
                        grounds under subparagraph (A) do exist.
                    ``(E) Report.--Not later than 6 months after the 
                date of the enactment of the Flood Insurance Reform Act 
                of 2004, the Director shall submit a report describing 
                the rules, procedures, and administration for appeals 
                under this paragraph to--
                            ``(i) the Committee on Banking, Housing, 
                        and Urban Affairs of the Senate; and
                            ``(ii) the Committee on Financial Services 
                        of the House of Representatives.
    ``(h) Discretionary Actions in Cases of Fraudulent Claims.--If the 
Director determines that a fraudulent claim was made under flood 
insurance coverage under this title for a severe repetitive loss 
property, the Director may--
            ``(1) cancel the policy and deny the provision to such 
        policyholder of any new flood insurance coverage under this 
        title for the property; or
            ``(2) refuse to renew the policy with such policyholder 
        upon expiration and deny the provision of any new flood 
        insurance coverage under this title to such policyholder for 
        the property.
    ``(i) Funding.--
            ``(1) In general.--Pursuant to section 1310(a)(8), the 
        Director may use amounts from the National Flood Insurance Fund 
        to provide assistance under this section in each of fiscal 
        years 2004, 2005, 2006, 2007, and 2008, except that the amount 
        so used in each such fiscal year may not exceed $40,000,000 and 
        shall remain available until expended. Notwithstanding any 
        other provision of this title, amounts made available pursuant 
        to this subsection shall not be subject to offsetting 
        collections through premium rates for flood insurance coverage 
        under this title.
            ``(2) Administrative expenses.--Of the amounts made 
        available under this subsection, the Director may use up to 5 
        percent for expenses associated with the administration of 
        section 1361A.
    ``(j) Termination.--The Director may not provide assistance under 
this section to any State or community after September 30, 2008.''.
    (b) Availability of National Flood Insurance Fund Amounts.--Section 
1310(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4017(a)) 
is amended--
            (1) in paragraph (7), by striking ``and'' at the end; and
            (2) by striking paragraph (8) and inserting the following:
            ``(8) for financial assistance under section 1361A to 
        States and communities for taking actions under such section 
        with respect to severe repetitive loss properties, but only to 
        the extent provided in section 1361A(i); and''.

SEC. 103. AMENDMENTS TO EXISTING FLOOD MITIGATION ASSISTANCE PROGRAM.

    (a) Standard for Approval of Mitigation Plans.--Section 1366(e)(3) 
of the National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is 
amended by adding at the end the following new sentence: ``The Director 
may approve only mitigation plans that give priority for funding to 
such properties, or to such subsets of properties, as are in the best 
interest of the National Flood Insurance Fund.''.
    (b) Priority for Mitigation Assistance.--Section 1366(e) of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is amended by 
striking paragraph (4) and inserting the following:
            ``(4) Priority for mitigation assistance.--In providing 
        grants under this subsection for mitigation activities, the 
        Director shall give first priority for funding to such 
        properties, or to such subsets of such properties as the 
        Director may establish, that the Director determines are in the 
        best interests of the National Flood Insurance Fund and for 
        which matching amounts under subsection (f) are available.''.
    (c) Coordination With States and Communities.--Section 1366 of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is amended by 
adding at the end the following:
    ``(m) Coordination With States and Communities.--The Director 
shall, in consultation and coordination with States and communities 
take such actions as are appropriate to encourage and improve 
participation in the national flood insurance program of owners of 
properties, including owners of properties that are not located in 
areas having special flood hazards <DELETED>but are located within the 
100-year floodplain</DELETED> (the 100-year floodplain), but are 
located within flood prone areas.''.
    (d) Funding.--Section 1367(b) of the National Flood Insurance Act 
of 1968 (42 U.S.C. 4104d(b)) is amended by striking paragraph (1) and 
inserting the following:
            ``(1) in each fiscal year, amounts from the National Flood 
        Insurance Fund not exceeding $40,000,000, to remain available 
        until expended;''.
    (e) Reduced Community Match.--Section 1366(g) of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4104c(g)), is amended--
            (2) by redesignating paragraph (2) as paragraph (3); and
            (3) by inserting after paragraph (1) the following:
            ``(2) Reduced community match.--With respect to any 1-year 
        period in which assistance is made available under this 
        section, the Director may adjust the contribution required 
        under paragraph (1) by any State, and for the communities 
        located in that State, to not less than 10 percent of the cost 
        of the activities for each severe repetitive loss property for 
        which grant amounts are provided if, for such year--
                    ``(A) the State has an approved State mitigation 
                plan meeting the requirements for hazard mitigation 
                planning under section 322 of the Robert T. Stafford 
                Disaster Relief and Emergency Assistance Act (42 U.S.C. 
                5165) that specifies how the State intends to reduce 
                the number of severe repetitive loss properties; and
                    ``(B) the Director determines, after consultation 
                with the State, that the State has taken actions to 
                reduce the number of such properties.''.
    (f) National Flood Mitigation Fund.--Section 1366(b)(2) of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4104c(b)(2)), is 
amended by striking ``$1,500,000'' and inserting ``7.5 percent of the 
available funds under this section''.

SEC. 104. FEMA AUTHORITY TO FUND MITIGATION ACTIVITIES FOR INDIVIDUAL 
              REPETITIVE CLAIMS PROPERTIES.

    (a) In General.--Chapter I of the National Flood Insurance Act of 
1968 (42 U.S.C. 4011 et seq.) is amended by adding at the end the 
following:

``SEC. 1323. GRANTS FOR REPETITIVE INSURANCE CLAIMS PROPERTIES.

    ``(a) In General.--The Director may provide funding for mitigation 
actions that reduce flood damages to individual properties for which 1 
or more claim payments for losses have been made under flood insurance 
coverage under this title, but only if the Director determines that--
            ``(1) such activities are in the best interest of the 
        National Flood Insurance Fund; and
            ``(2) such activities cannot be funded under the program 
        under section 1366 because--
                    ``(A) the requirements of section 1366(g) are not 
                being met by the State or community in which the 
                property is located; or
                    ``(B) the State or community does not have the 
                capacity to manage such activities.
    ``(b) Priority for Worst-Case Properties.--In determining the 
properties for which funding is to be provided under this section, the 
Director shall consult with the States in which such properties are 
located and provide assistance for properties in the order that will 
result in the greatest amount of savings to the National Flood 
Insurance Fund in the shortest period of time.''.
    (b) Availability of National Flood Insurance Fund Amounts.--Section 
1310(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4017(a)) 
is amended by adding at the end the following:
            ``(9) for funding, not to exceed $10,000,000 in any fiscal 
        year, for mitigation actions under section 1323, except that, 
notwithstanding any other provision of this title, amounts made 
available pursuant to this paragraph shall not be subject to offsetting 
collections through premium rates for flood insurance coverage under 
this title.''.

SEC. 105. AMENDMENTS TO ADDITIONAL COVERAGE FOR COMPLIANCE WITH LAND 
              USE AND CONTROL MEASURES.

    (a) Compliance With Land Use and Control Measures.--Section 1304(b) 
of the National Flood Insurance Act of 1968 (42 U.S.C. 4011(b)) is 
amended--
            (1) in the matter preceding paragraph (1)--
                    (A) by striking ``compliance'' and inserting 
                ``implementing measures that are consistent''; and
                    (B) by inserting ``by the community'' after 
                ``established'';
            (2) in paragraph (2), by striking ``have flood damage in 
        which the cost of repairs equals or exceeds 50 percent of the 
        value of the structure at the time of the flood event; and'' 
        and inserting ``are substantially damaged structures;''
            (3) in paragraph (3), by striking ``compliance with land 
        use and control measures.'' and inserting ``the implementation 
        of such measures; and''; and
            (4) by inserting after paragraph (3) and before the last 
        undesignated paragraph the following:
            ``(4) properties for which an offer of mitigation 
        assistance is made under--
                    ``(A) section 1366 (Flood Mitigation Assistance 
                Program);
                    ``(B) section 1368 (Repetitive Loss Priority 
                Program and Individual Priority Property Program);
                    ``(C) the Hazard Mitigation Grant Program 
                authorized under section 404 of the Robert T. Stafford 
                Disaster Assistance and Emergency Relief Act (42 U.S.C. 
                5170c);
                    ``(D) the Predisaster Hazard Mitigation Program 
                under section 203 of the Robert T. Stafford Disaster 
                Assistance and Emergency Relief Act (42 U.S.C. 5133); 
                and
                    ``(E) any programs authorized or for which funds 
                are appropriated to address any unmet needs or for 
                which supplemental funds are made available.''.
    (b) Definitions.--Section 1370(a) of the National Flood Insurance 
Act of 1968 (42 U.S.C. 4121(a)) is amended--
            (1) by striking paragraph (7) and inserting the following:
            ``(7) the term `repetitive loss structure' means a 
        structure covered by a contract for flood insurance that--
                    ``(A) has incurred flood-related damage on 2 
                occasions, in which the cost of repair, on the average, 
                equaled or exceeded 25 percent of the value of the 
                structure at the time of each such flood event; and
                    ``(B) at the time of the second incidence of flood-
                related damage, the contract for flood insurance 
                contains increased cost of compliance coverage.'';
            (2) in paragraph (13), by striking ``and'' at the end;
            (3) in paragraph (14), by striking the period and inserting 
        ``; and''; and
            (4) by adding at the end the following:
            ``(15) the term `substantially damaged structure' means a 
        structure covered by a contract for flood insurance that has 
        incurred damage for which the cost of repair exceeds an amount 
        specified in any regulation promulgated by the Director, or by 
        a community ordinance, whichever is lower.''.

SEC. 106. ACTUARIAL RATE PROPERTIES.

    (a) In General.--Section 1308 of the National Flood Insurance Act 
of 1968 (42 U.S.C. 4015) is amended by striking subsection (c) and 
inserting the following:
    ``(c) Actuarial Rate Properties.--Subject only to the limitations 
provided under paragraphs (1) and (2), the chargeable rate shall not be 
less than the applicable estimated risk premium rate for such area (or 
subdivision thereof) under section 1307(a)(1) with respect to the 
following properties:
            ``(1) Post-firm properties.--Any property the construction 
        or substantial improvement of which the Director determines has 
        been started after December 31, 1974, or started after the 
        effective date of the initial rate map published by the 
        Director under paragraph (2) of section 1360 for the area in 
        which such property is located, whichever is later, except that 
        the chargeable rate for properties under this paragraph shall 
        be subject to the limitation under subsection (e).
            ``(2) Certain leased coastal and river properties.--Any 
        property leased from the Federal Government (including 
        residential and nonresidential properties) that the Director 
        determines is located on the river-facing side of any dike, 
        levee, or other riverine flood control structure, or seaward of 
        any seawall or other coastal flood control structure.''.
    (b) Inapplicability of Annual Limitations on Premium Increases.--
Section 1308(e) of the National Flood Insurance Act of 1968 (42 U.S.C. 
4015(e)) is amended by striking ``Notwithstanding'' and inserting 
``Except with respect to properties described under paragraph (2) or 
(3) of subsection (c), and notwithstanding''.

SEC. 107. GEOSPATIAL DIGITAL FLOOD HAZARD DATA.

    For the purposes of flood insurance and floodplain management 
activities conducted pursuant to the National Flood Insurance Program 
under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 et 
seq.), geospatial digital flood hazard data distributed by the Federal 
Emergency Management Agency, or its designee, or the printed products 
derived from that data, are interchangeable and legally equivalent for 
the determination of the location of 1 in 100 year and 1 in 500 year 
flood planes, provided that all other geospatial data shown on the 
printed product meets or exceeds any accuracy standard promulgated by 
the Federal Emergency Management Agency.

SEC. 108. REPLACEMENT OF MOBILE HOMES ON ORIGINAL SITES.

    Section 1315 of the National Flood Insurance Act of 1968 (42 U.S.C. 
4022) is amended by adding at the end the following:
    ``(c) Replacement of Mobile Homes on Original Sites.--
            ``(1) Community participation.--The placement of any mobile 
        home on any site shall not affect the eligibility of any 
        community to participate in the flood insurance program under 
this title and the Flood Disaster Protection Act of 1973 
(notwithstanding that such placement may fail to comply with any 
elevation or flood damage mitigation requirements), if--
                    ``(A) such mobile home was previously located on 
                such site;
                    ``(B) such mobile home was relocated from such site 
                because of flooding that threatened or affected such 
                site; and
                    ``(C) such replacement is conducted not later than 
                the expiration of the 180-day period that begins upon 
                the subsidence (in the area of such site) of the body 
                of water that flooded to a level considered lower than 
                flood levels.
            ``(2) Definition.--For purposes of this subsection, the 
        term `mobile home' has the meaning given such term in the law 
        of the State in which the mobile home is located.''.

SEC. 109. REITERATION OF FEMA RESPONSIBILITY TO MAP MUDSLIDES.

    As directed in section 1360(b) of the National Flood Insurance Act 
of 1968 (42 U.S.C. 4101(b)), the Director of the Federal Emergency 
Management Agency is again directed to accelerate the identification of 
risk zones within flood-prone and mudslide-prone areas, as provided by 
subsection (a)(2) of such section 1360, in order to make known the 
degree of hazard within each such zone at the earliest possible date.

                   TITLE II--MISCELLANEOUS PROVISIONS

SEC. 201. DEFINITIONS.

    In this title, the following definitions shall apply:
            (1) Director.--The term ``Director'' means the Director of 
        the Federal Emergency Management Agency.
            (2) Flood insurance policy.--The term ``flood insurance 
        policy'' means a flood insurance policy issued under the 
        National Flood Insurance Act of 1968 (42 U.S.C. et seq.).
            (3) Program.--The term ``Program'' means the National Flood 
        Insurance Program established under the National Flood 
        Insurance Act of 1968 (42 U.S.C. 4001 et seq.).

SEC. 202. SUPPLEMENTAL FORMS.

    (a) In General.--Not later than 6 months after the date of 
enactment of this Act, the Director shall develop supplemental forms to 
be issued in conjunction with the issuance of a flood insurance policy 
that set forth, in simple terms--
            (1) the exact coverages being purchased by a policyholder;
            (2) any exclusions from coverage that apply to the 
        coverages purchased;
            (3) an explanation, including illustrations, of how lost 
        items and damages will be valued under the policy at the time 
        of loss;
            (4) the number and dollar value of claims filed under a 
        flood insurance policy over the life of the property, and the 
        effect, under the National Flood Insurance Act of 1968 (42 
        U.S.C. 4001 et seq.), of the filing of any further claims under 
        a flood insurance policy with respect to that property; and
            (5) any other information that the Director determines will 
        be helpful to policyholders in understanding flood insurance 
        coverage.
    (b) Distribution.--The forms developed under subsection (a) shall 
be given to--
            (1) all holders of a flood insurance policy at the time of 
        purchase and renewal; and
            (2) insurance companies and agents that are authorized to 
        sell flood insurance policies.

SEC. 203. ACKNOWLEDGEMENT FORM.

    (a) In General.--Not later than 6 months after the date of 
enactment of this Act, the Director shall develop an acknowledgement 
form to be signed by the purchaser of a flood insurance policy that 
contains--
            (1) an acknowledgement that the purchaser has received a 
        copy of the standard flood insurance policy, and any forms 
        developed under section 202; and
            (2) an acknowledgement that the purchaser has been told 
        that the contents of a property or dwelling are not covered 
        under the terms of the standard flood insurance policy, and 
        that the policyholder has the option to purchase additional 
        coverage for such contents.
    (b) Distribution.--Copies of an acknowledgement form executed under 
subsection (a) shall be made available to the purchaser and the 
Director.

SEC. 204. FLOOD INSURANCE CLAIMS HANDBOOK.

    (a) In General.--Not later than 6 months after the date of 
enactment of this Act, the Director shall develop a flood insurance 
claims handbook that contains--
            (1) a description of the procedures to be followed to file 
        a claim under the Program, including how to pursue a claim to 
        completion;
            (2) how to file supplementary claims, proof of loss, and 
        any other information relating to the filing of claims under 
        the Program; and
            (3) detailed information regarding the appeals process 
        established under section 205.
    (b) Distribution.--The handbook developed under subsection (a) 
shall be made available to--
            (1) each insurance company and agent authorized to sell 
        flood insurance policies; and
            (2) each purchaser, at the time of purchase and renewal, of 
        a flood insurance policy, and at the time of any flood loss 
        sustained by such purchaser.

SEC. 205. APPEAL OF DECISIONS RELATING TO FLOOD INSURANCE COVERAGE.

    Not later than 6 months after the date of enactment of this Act, 
the Director shall, by regulation, establish an appeals process through 
which holders of a flood insurance policy may appeal the decisions, 
with respect to claims, proofs of loss, and loss estimates relating to 
such flood insurance policy, of--
            (1) any insurance agent or adjuster, or insurance company; 
        or
            (2) any employee or contractor of the Federal Emergency 
        Management Agency.

SEC. 206. STUDY AND REPORT ON USE OF COST COMPLIANCE COVERAGE.

    Not later than 1 year after the date of enactment of this Act, the 
Director of the Federal Emergency Management Agency shall submit to 
Congress a report that sets forth--
            (1) the use of cost of compliance coverage under section 
        1304(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 
        4011(b)) in connection with flood insurance policies;
            (2) any barriers to policyholders using the funds provided 
        by cost of compliance coverage under that section 1304(b) under 
        a flood insurance policy, and recommendations to address those 
        barriers; and
            (3) the steps that the Federal Emergency Management Agency 
        has taken to ensure that funds paid for cost of compliance 
        coverage under that section 1304(b) are being used to lessen 
        the burdens on all homeowners and the Program.

SEC. 207. MINIMUM TRAINING AND EDUCATION REQUIREMENTS.

    The Director of the Federal Emergency Management Agency shall, in 
cooperation with the insurance industry, State insurance regulators, 
and other interested parties--
            (1) establish minimum training and education requirements 
        for all insurance agents who sell flood insurance policies; and
            (2) not later than 6 months after the date of enactment of 
        this Act, publish these requirements in the Federal Register, 
        and inform insurance companies and agents of the requirements.

SEC. 208. GAO STUDY AND REPORT.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study of--
            (1) the adequacy of the scope of coverage provided under 
        flood insurance policies in meeting the intended goal of 
        Congress that flood victims be restored to their pre-flood 
        conditions, and any recommendations to ensure that goal is 
        being met;
            (2) the adequacy of payments to flood victims under flood 
        insurance policies; and
            (3) the practices of the Federal Emergency Management 
        Agency and insurance adjusters in estimating losses incurred 
        during a flood, and how such practices affect the adequacy of 
        payments to flood victims.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Comptroller General shall submit to Congress a report 
regarding the results of the study under subsection (a).

SEC. 209. PROSPECTIVE PAYMENT OF FLOOD INSURANCE PREMIUMS.

    Section 1308 of the National Flood Insurance Act of 1968 (42 U.S.C. 
4015) is amended by adding at the end the following:
    ``(f) Adjustment of Premium.--Notwithstanding any other provision 
of law, if the Director determines that the holder of a flood insurance 
policy issued under this Act is paying a lower premium than is required 
under this section due to an error in the flood plain determination, 
the Director may only prospectively charge the higher premium rate.''.

SEC. 210. REPORT ON CHANGES TO FEE SCHEDULE OR FEE PAYMENT 
              ARRANGEMENTS.

    Not later than 3 months after the date of enactment of this Act, 
the Director shall submit a report on any changes or modifications made 
to the fee schedule or fee payment arrangements between the Federal 
Emergency Management Agency and insurance adjusters who provide 
services with respect to flood insurance policies to--
            (1) the Committee on Banking, Housing, and Urban Affairs of 
        the Senate; and
            (2) the Committee on Financial Services of the House of 
        Representatives.




                                                       Calendar No. 513

108th CONGRESS

  2d Session

                                S. 2238

                          [Report No. 108-262]

_______________________________________________________________________

                                 A BILL

 To amend the National Flood Insurance Act of 1968 to reduce losses to 
  properties for which repetitive flood insurance claim payments have 
                               been made.

_______________________________________________________________________

                              May 13, 2004

                        Reported with amendments