Congressional Record, Volume 140 Issue 51 (Tuesday, May 3, 1994)

[Congressional Record Volume 140, Number 51 (Tuesday, May 3, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[Congressional Record: May 3, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

NATIONAL FLOOD INSURANCE REFORM ACT OF 1994

Mr. KENNEDY. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 3191) to revise the national flood insurance program to
promote compliance with requirements for mandatory purchase of flood
insurance, to provide assistance for mitigation activities designed to
reduce damages to structures subject to flooding and shoreline erosion,
and to increase the maximum coverage amounts under the program, and for
other purposes, as amended.
The Clerk read as follows:

H.R. 3191

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``National
Flood Insurance Reform Act of 1994''.
(b) Table of Contents.--
Sec. 1. Short title and table of contents.
Sec. 2. Declaration of purpose under National Flood Insurance Act of
1968.

TITLE I--DEFINITIONS

Sec. 101. Flood Disaster Protection Act of 1973.
Sec. 102. National Flood Insurance Act of 1968.

TITLE II--COMPLIANCE AND INCREASED PARTICIPATION

Sec. 201. Existing flood insurance purchase requirements.
Sec. 202. Expanded flood insurance purchase requirements.
Sec. 203. Escrow of flood insurance payments.
Sec. 204. Placement of flood insurance by lenders.
Sec. 205. Penalties for failure to require flood insurance or notify.
Sec. 206. Ongoing compliance with flood insurance purchase
requirements.
Sec. 207. Fees for determining applicability of flood insurance
purchase requirements.
Sec. 208. Notice requirements.
Sec. 209. Standard hazard determination forms.
Sec. 210. Examinations regarding compliance.
Sec. 211. Financial Institutions Examination Council.
Sec. 212. Clerical amendments.

TITLE III--RATINGS AND INCENTIVES FOR COMMUNITY FLOODPLAIN MANAGEMENT
PROGRAMS

Sec. 301. Community rating system and incentives for community
floodplain management.
Sec. 302. Funding.

TITLE IV--MITIGATION OF FLOOD RISKS

Sec. 401. Repeal of flooded property purchase and loan program.
Sec. 402. Termination of erosion-threatened structures program.
Sec. 403. Mitigation assistance program.
Sec. 404. Establishment of National Flood Mitigation Fund.
Sec. 405. Insurance premium mitigation surcharge.
Sec. 406. Study of mitigation insurance.

TITLE V--FLOOD INSURANCE TASK FORCE

Sec. 501. Flood Insurance Interagency Task Force.

TITLE VI--MISCELLANEOUS PROVISIONS

Sec. 601. Extension of flood insurance program.
Sec. 602. Limitation on premium increases.
Sec. 603. Maximum flood insurance coverage amounts.
Sec. 604. Flood insurance program arrangements with private insurance
entities.
Sec. 605. Updating of flood maps.
Sec. 606. Technical Mapping Advisory Council.
Sec. 607. Evaluation of erosion hazards.
Sec. 608. Study of economic effects of charging actuarially-based
premium rates for pre-firm structures.
Sec. 609. Effective dates of policies.
Sec. 610. Regulations.
Sec. 611. Relation to State and local laws.

SEC. 2. DECLARATION OF PURPOSE UNDER NATIONAL FLOOD INSURANCE
ACT OF 1968.

Section 1302(e) of the National Flood Insurance Act of 1968
(42 U.S.C. 4001(e)) is amended--
(1) by redesignating clauses (3), (4), and (5), as clauses
(4), (5), and (6), respectively; and
(2) by inserting after the comma at the end of clause (2)
the following: ``(3) encourage State and local governments to
protect natural and beneficial floodplain functions that
reduce flood-related losses,''.
TITLE I--DEFINITIONS

SEC. 101. FLOOD DISASTER PROTECTION ACT OF 1973.

(a) In General.--Section 3(a) of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4003(a)) is amended--
(1) by striking paragraph (5) and inserting the following
new paragraph:
``(5) `Federal entity for lending regulation' means the
Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Comptroller of the
Currency, the Office of Thrift Supervision, and the National
Credit Union Administration, and with respect to a particular
regulated lending institution means the entity primarily
responsible for the supervision, approval, or regulation of
the institution;'';
(2) in paragraph (6), by striking the period at the end and
inserting a semicolon; and
(3) by inserting after paragraph (6) the following new
paragraphs:
``(7) `Federal agency lender' means a Federal agency that
makes direct loans secured by improved real estate or a
mobile home, to the extent such agency acts in such capacity;
``(8) `lender' includes any regulated lending institution,
other lending institution, and Federal agency lender, but
does not include any agency engaged primarily in the purchase
of mortgage loans;
``(9) `other lending institution' means any lending
institution that is not subject to the supervision, approval,
regulation, or insuring of any Federal entity for lending
regulation and that is not a Federal agency lender, but does
not include institutions engaged primarily in the purchase of
mortgage loans;
``(10) `regulated lending institution' means any bank,
savings and loan association, credit union, or similar
institution subject to the supervision, approval, regulation,
or insuring of a Federal entity for lending regulation; and
``(11) `servicer' means the person responsible for
receiving any scheduled periodic payments from a borrower
pursuant to the terms of a loan, including amounts for taxes,
insurance premiums, and other charges with respect to the
property, and making the payments of principal and interest
and such other payments with respect to the amounts received
from the borrower as may be required pursuant to the terms of
the loan.''.
(b) Conforming Amendment.--Section 202(b) of the Flood
Disaster Protection Act of 1973 (42 U.S.C. 4106(b)) is
amended by striking ``Federal instrumentality described in
such section shall by regulation require the institutions''
and inserting ``Federal entity for lending regulation (with
respect to regulated lending institutions), the Secretary of
Housing and Urban Development (with respect to other lending
institutions), and the appropriate head of each Federal
agency lender, shall by regulation require the lenders''.

SEC. 102. NATIONAL FLOOD INSURANCE ACT OF 1968.

(a) In General.--Section 1370(a) of the National Flood
Insurance Act of 1968 (42 U.S.C. 4121(a)) is amended--
(1) in paragraph (5), by striking ``and'' at the end;
(2) in paragraph (6), by striking the period at the end and
inserting a semicolon; and
(3) by inserting after paragraph (6) the following new
paragraphs:
``(7) the term `repetitive loss structure' means a
structure covered by a contract for flood insurance under
this title that has incurred flood-related damage on 2
occasions during a 10-year period ending on the date of the
event for which a second claim is made, 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;
``(8) the term `coastal' means relating to the coastlines
and bays of the tidal waters of the United States or the
shorelines of the Great Lakes, but does not refer to bayous,
riverine areas, and riverine portions of estuaries;
``(9) the term `Federal agency lender' means a Federal
agency that makes direct loans secured by improved real
estate or a mobile home, to the extent such agency acts in
such capacity;
``(10) the term `Federal entity for lending regulation'
means the Board of Governors of the Federal Reserve System,
the Federal Deposit Insurance Corporation, the Comptroller of
the Currency, the Office of Thrift Supervision, and the
National Credit Union Administration, and with respect to a
particular regulated lending institution means the entity
primarily responsible for the supervision, approval, or
regulation of the institution;
``(11) the term `lender' includes any regulated lending
institution, other lending institution, and Federal agency
lender, but does not include any agency engaged primarily in
the purchase of mortgage loans;
``(12) the term `natural and beneficial floodplain
functions' means--
``(A) the functions associated with the natural or
relatively undisturbed floodplain that (i) moderate flooding,
retain flood waters, reduce erosion and sedimentation, and
mitigate the effect of waves and storm surge from storms, and
(ii) reduce flood related damage; and
``(B) ancillary beneficial functions, including maintenance
of water quality and recharge of ground water, that reduce
flood related damage;
``(13) the term `regulated lending institution' means a
bank, savings and loan association, credit union, or similar
institution subject to the supervision, approval, regulation,
or insuring of a Federal entity for lending regulation;
``(14) the term `other lending institution' means any
lending institution that is not subject to the supervision,
approval, regulation, or insuring of any Federal entity for
lending regulation and that is not a Federal agency lender,
but does not include institutions engaged primarily in the
purchase of mortgage loans; and
``(15) the term `servicer' means the person responsible for
receiving any scheduled periodic payments from a borrower
pursuant to the terms of a loan, including amounts for taxes,
insurance premiums, and other charges with respect to the
property, and making the payments of principal and interest
and such other payments with respect to the amounts received
from the borrower as may be required pursuant to the terms of
the loan.''.
(b) Conforming Amendment.--Section 1322(d) of the National
Flood Insurance Act of 1968 (42 U.S.C. 4029(d)) is amended by
striking ``federally supervised, approved, regulated or
insured financial institution'' and inserting ``regulated
lending institution, other lending institution, or Federal
agency lender''.
TITLE II--COMPLIANCE AND INCREASED PARTICIPATION

SEC. 201. EXISTING FLOOD INSURANCE PURCHASE REQUIREMENTS.

Section 102(a) of the Flood Disaster Protection Act of 1973
(42 U.S.C. 4012a(a)) is amended--
(1) by inserting after ``(a)'' the following: ``Requirement
for Federal Assistance for Acquisition or Construction.--'';
and
(2) by adding at the end the following new sentence: ``This
subsection may not be construed to permit the provision of
any amount of financial assistance with respect to any
building or mobile home and related personal property for
which flood insurance is required under this subsection,
unless the requirements under this subsection are complied
with in full. The prohibitions and requirements of this
subsection relating to financial assistance may not be waived
for any purpose.''.

SEC. 202. EXPANDED FLOOD INSURANCE PURCHASE REQUIREMENTS.

Section 102(b) of the Flood Disaster Protection Act of 1973
(42 U.S.C. 4012a(b)) is amended to read as follows:
``(b) Requirement for Mortgage Loans.--
``(1) Regulated lending institutions.--Each Federal entity
for lending regulation (after consultation and coordination
with the Financial Institutions Examination Council
established under the Federal Financial Institutions
Examination Council Act of 1974) shall by regulation direct
regulated lending institutions not to make, increase, extend,
or renew, after the expiration of 60 days following the date
of the enactment of this Act, any loan secured by improved
real estate or a mobile home located or to be located in an
area that has been identified by the Director as an area
having special flood hazards and in which flood insurance has
been made available under the National Flood Insurance Act of
1968, unless the building or mobile home and any personal
property securing such loan is covered for the term of the
loan by flood insurance in an amount at least equal to the
outstanding principal balance of the loan or the maximum
limit of coverage made available under the Act with respect
to the particular type of property, whichever is less.
``(2) Other lending institutions.--The Secretary of Housing
and Urban Development (after consultation and coordination
with the Financial Institutions Examination Council) shall by
regulation direct that--
``(A) any other lending institution may not make, increase,
extend, or renew any loan secured by improved real estate
consisting of a 1- to 4-family residence or a mobile home
located or to be located in an area that has been identified
by the Director of the Federal Emergency Management Agency as
an area having special flood hazards and in which flood
insurance has been made available under the National Flood
Insurance Act of 1968, unless the building or mobile home and
any personal property securing such loan is covered for the
term of the loan by flood insurance in the amount provided in
paragraph (1); and
``(B) any loan that is--
``(i) secured by improved real estate or a mobile home
located in an area that has been identified at the time of
the origination of the loan by the Director of the Federal
Emergency Management Agency, as an area of special flood
hazards and in which flood insurance is available under the
National Flood Insurance Act of 1968, and
``(ii) purchased by the Government National Mortgage
Association,

is covered for the term of the loan by flood insurance in the
amount provided in paragraph (1).
``(3) Federal agency lenders.--A Federal agency lender may
not make, increase, extend, or renew any loan secured by
improved real estate or a mobile home located or to be
located in an area that has been identified by the Director
of the Federal Emergency Management Agency as an area having
special flood hazards and in which flood insurance has been
made available under the National Flood Insurance Act of
1968, unless the building or mobile home and any personal
property securing such loan is covered for the term of the
loan by flood insurance in the amount provided in paragraph
(1). The relevant head of each Federal agency lender shall
issue any regulations necessary to carry out this paragraph.
Such regulations shall be consistent with and substantially
identical to the regulations issued under paragraphs (1) and
(2).
``(4) Government-sponsored enterprises for housing.--The
Federal National Mortgage Association and the Federal Home
Loan Mortgage Corporation shall implement procedures
reasonably designed to ensure that any loan that is--
``(A) secured by improved real estate or a mobile home
located in an area that has been identified at the time of
the origination of the loan by the Director as an area of
special flood hazards and in which flood insurance is
available under the National Flood Insurance Act of 1968, and
``(B) purchased by either such entity,
is covered for the term of the loan by flood insurance in the
amount provided in paragraph (1).
``(5) Contested determinations.--If a borrower under a loan
disputes or challenges the determination of the lender that
the improved real estate or mobile home securing the loan is
located in an area of special flood hazards, the lender shall
review and consider any relevant information, as determined
by the Director, submitted to the lender by the borrower.
``(6) Applicability.--Paragraphs (2) through (4) shall
apply only with respect to any loan made, increased,
extended, or renewed after the expiration of the 1-year
period beginning on the date of the enactment of the National
Flood Insurance Reform Act of 1994.''.

SEC. 203. ESCROW OF FLOOD INSURANCE PAYMENTS.

Section 102 of the Flood Disaster Protection Act of 1973
(42 U.S.C. 4012a) is amended by adding at the end the
following new subsection:
``(d) Escrow of Flood Insurance Payments.--
``(1) Private lenders.--For loans secured by residential
real estate, each Federal entity for lending regulation (with
respect to any loans of regulated lending institutions) and
the Secretary of Housing and Urban Development (with respect
to any loans of other lending institutions), after
consultation and coordination with the Financial Institutions
Examination Council, shall by regulation require that, if a
lender or other servicer of the loan requires the escrowing
of taxes, insurance premiums, fees, or any other charges for
a loan secured by residential real estate or a mobile home,
then all premiums and fees for flood insurance under the
National Flood Insurance Act of 1968 for the residential real
estate or mobile home shall be paid to the lender or servicer
of the loan. Premiums and fees paid to the lender or servicer
shall be paid in a manner sufficient to make payments as due
for the duration of the loan. Upon receipt of the premiums,
the lender or servicer of the loan shall deposit the premiums
in an escrow account on behalf of the borrower. Upon receipt
of a notice from the Director or the provider of the
insurance that insurance premiums are due, the lender or
servicer shall pay from the escrow account to the provider of
the insurance the amount of insurance premiums owed.
``(2) Federal agency lenders.--The appropriate head of each
Federal agency lender shall by regulation require and provide
for escrow and payment of any flood insurance premiums and
fees relating to residential property securing loans made by
the Federal agency lender under the circumstances and in the
manner provided under paragraph (1). Any regulations issued
under this paragraph shall be consistent with and
substantially identical to the regulations issued under
paragraph (1).
``(3) Applicability of respa.--Escrow accounts established
pursuant to this subsection shall be subject to the
provisions of section 10 of the Real Estate Settlement
Procedures Act of 1974.
``(4) Applicability.--This subsection shall apply only with
respect to any loan made, increased, extended, or renewed
after the expiration of the 1-year period beginning on the
date of the enactment of the National Flood Insurance Reform
Act of 1994.''.

SEC. 204. PLACEMENT OF FLOOD INSURANCE BY LENDERS.

(a) Actions Required by Lender.--Section 102 of the Flood
Disaster Protection Act of 1973 (42 U.S.C. 4012a), as amended
by the preceding provisions of this Act, is further amended
by adding at the end the following new subsection:
``(e) Placement of Flood Insurance by Lender.--
``(1) Notification to borrower of lack of coverage.--If, at
any time during the term of a loan secured by improved real
estate or by a mobile home located in an area that has been
identified by the Director as an area having special flood
hazards and in which flood insurance is available under the
National Flood Insurance Act of 1968, the lender or servicer
for the loan determines that the building or mobile home and
any personal property securing the loan is covered by flood
insurance in an amount less than the amount required for the
property pursuant to subsection (b), the lender or servicer
shall notify the borrower under the loan that the borrower
should obtain, at the borrower's expense, an amount of flood
insurance for the property that is not less than the amount
under subsection (b)(1), for the term of the loan.
``(2) Purchase of coverage on behalf of borrower.--If the
borrower fails to purchase such flood insurance within 60
days after such notification, the lender or servicer for the
loan shall purchase the insurance on behalf of the borrower
and may charge the borrower for the cost of premiums and fees
incurred by the lender or servicer for the loan in purchasing
the insurance.
``(3) Review of determination regarding required
purchase.--
``(A) In general.--A borrower may request that the Director
review a determination that the improved real estate or
mobile home securing the loan is located in an area of
special flood hazards. Not later than 45 days after the
Director receives the request, the Director shall review the
determination and provide the borrower with a letter stating
whether or not the property is in a special flood hazards
area. The determination of the Director shall be final.
``(B) Effect of determination.--Any person to whom a
borrower provides a letter issued by the Director pursuant to
subparagraph (A), stating that the property of the borrower
is not in an area of special flood hazards, shall have no
obligation under this title to require the purchase of flood
insurance on the property during the 1-year period beginning
upon the date that such letter is provided.
``(4) Applicability.--This subsection shall apply to all
loans outstanding on or after the date of enactment of the
National Flood Insurance Reform Act of 1994.''.

SEC. 205. PENALTIES FOR FAILURE TO REQUIRE FLOOD INSURANCE OR
NOTIFY.

Section 102 of the Flood Disaster Protection Act of 1973
(42 U.S.C. 4012a), as amended by the preceding provisions of
this Act, is further amended by adding at the end the
following new subsections:
``(f) Civil Monetary Penalties for Failure to Require Flood
Insurance or Notify.--
``(1) Civil monetary penalties against lenders.--Any
regulated or other lending institution that is found to have
a pattern or practice of committing violations under
paragraph (2) shall be assessed a civil penalty by the
appropriate Federal entity for lending regulation (with
respect to regulated lending institutions) or the Secretary
of Housing and Urban Development (with respect to other
lending institutions) in the amount provided under paragraph
(5).
``(2) Lender violations.--The violations referred to in
paragraph (1) shall be--
``(A) making, increasing, extending, or renewing loans in
violation of--
``(i) the regulations issued pursuant to subsection (b) of
this section;
``(ii) the escrow requirements under subsection (d) of this
section; or
``(iii) the notice requirements under section 1364 of the
National Flood Insurance Act of 1968; or
``(B) failure to provide notice or purchase flood insurance
coverage in violation of subsection (e) of this section.
``(3) Civil monetary penalties against gse's.--If the
Federal National Mortgage Association or the Federal Home
Loan Mortgage Corporation is found by the Director of the
Office of Federal Housing Enterprise Oversight of the
Department of Housing and Urban Development to have a pattern
or practice of purchasing loans in violation of the
procedures established pursuant to subsection (b)(4) of this
section, the Director of such Office shall assess a civil
penalty against such enterprise in the amount provided under
paragraph (5) of this subsection. For purposes of this
subsection, the term `enterprise' means the Federal National
Mortgage Association or the Federal Home Loan Mortgage
Corporation.
``(4) Notice and hearing.--A penalty under this subsection
may be issued only after notice and an opportunity for a
hearing on the record.
``(5) Amount.--A civil monetary penalty under this
subsection may not exceed $350 for each violation under
paragraph (2) or paragraph (3). The total amount of penalties
assessed under this subsection against any single regulated
lending institution, other lending institution, or enterprise
for any calendar year may not exceed $100,000.
``(6) Lender compliance.--Notwithstanding any State or
local law, for purposes of this subsection, any lender that
purchases flood insurance or renews a contract for flood
insurance on behalf of or as an agent of a borrower of a loan
for which flood insurance is required shall be considered to
have complied with the regulations issued under subsection
(b).
``(7) Effect of transfer on liability.--Any sale or other
transfer of a loan by a lender who has committed a violation
under paragraph (1), that occurs subsequent to the violation,
shall not affect the liability of the transferring lender
with respect to any penalty under this subsection. A lender
shall not be liable for any violations relating to a loan
committed by another lender who previously held the loan.
``(8) Deposit of penalties.--Any penalties collected under
this subsection shall be paid into the National Flood
Mitigation Fund under section 1367 of the National Flood
Insurance Act of 1968.
``(9) Additional penalties.--Any penalty under this
subsection shall be in addition to any civil remedy or
criminal penalty otherwise available.
``(10) Statute of limitations.--No penalty may be imposed
under this subsection after the expiration of the 5-year
period beginning on the date of the occurrence of the
violation for which the penalty is authorized under this
subsection.
``(g) Other Actions to Remedy Pattern of Noncompliance.--
``(1) Authority of federal entities for lending
regulation.--The head of the applicable Federal entity for
lending regulation may require a regulated lending
institution to take such remedial actions as are necessary to
ensure that the regulated lending institution complies with
the requirements of the national flood insurance program if
the Federal agency for lending regulation makes a
determination under paragraph (3) regarding the regulated
lending institution.
``(2) Authority of secretary of hud.--The Secretary of
Housing and Urban Development may require an other lending
institution to take such remedial actions as are necessary to
ensure that the other lending institution complies with the
requirements of the national flood insurance program if such
Secretary makes a determination under paragraph (3) regarding
the other lending institution.
``(3) Determination of violations.--A determination under
this paragraph shall be a finding that--
``(A) the regulated lending institution or other lending
institution, as the case may be, has engaged in a pattern and
practice of noncompliance in violation of the regulations
issued pursuant to subsection (b), (d), or (e) of this
section or the notice requirements under section 1364 of the
National Flood Insurance Act of 1968; and
``(B) the regulated lending institution or other lending
institution, as the case may be, has not demonstrated
measurable improvement in compliance despite the assessment
of civil monetary penalties under subsection (f).''.

SEC. 206. ONGOING COMPLIANCE WITH FLOOD INSURANCE PURCHASE
REQUIREMENTS.

Section 102 of the Flood Disaster Protection Act of 1973
(42 U.S.C. 4012a), as amended by the preceding provisions of
this Act, is further amended by adding at the end the
following new subsection:
``(h) Notification of Flood Hazards to Loan Transferee.--
``(1) In general.--Except as provided in paragraphs (2)
through (5), before the sale or transfer of any loan secured
by improved real estate or a mobile home, the seller or
transferor of the loan shall determine whether the property
is in an area that has been designated by the Director as an
area having special flood hazards. The seller or transferor
shall, before sale or transfer, notify the purchaser or
transferee and any servicer of the loan in writing regarding
the results of the determination. A determination under this
paragraph shall be evidenced using the standard hazard
determination form under section 1365 of the National Flood
Insurance Act of 1968.
``(2) Exceptions.--For any loan secured by improved real
estate or a mobile home, a determination and notice under
paragraph (1) shall not be required if, during the 5-year
period ending on the date of the sale or transfer of the
loan--
``(A) a determination and notice under paragraph (1) has
been made for the property secured by the loan; or
``(B)(i) the loan has been made, increased, extended, or
renewed; and
``(ii) the lender making, increasing, extending, or
renewing the loan was subject, at the time of such
transaction, to regulations issued pursuant to paragraph (1),
(2), or (3) of subsection (b).
``(3) Loans transferred by fdic.--
``(A) In general.--Except as provided in subparagraph (B),
for any loan secured by improved real estate or a mobile home
that is sold or transferred by the Federal Deposit Insurance
Corporation acting in its corporate capacity or in its
capacity as conservator or receiver, the purchaser or
transferee of the loan shall determine whether the property
is in an area that has been designated by the Director as an
area having special flood hazards.
``(B) Exceptions.--Such determination and notice shall not
be required for any loan--
``(i) sold or transferred to an entity under the control of
the Federal Deposit Insurance Corporation; or
``(ii) for which the purchaser or transferee exercises any
available option to transfer or put the loan back to the
Federal Deposit Insurance Corporation.
``(C) Notice to director.--A purchaser or transferee of a
loan required to make a determination and notification under
subparagraph (A) shall notify the Director and any servicer
of the loan of the results of the determination (using the
standard hazard determination form under section 1365 of the
National Flood Insurance Act of 1968) before the expiration
of the 90-day period beginning on the later of (i) the
purchase or transfer of the loan, or (ii) the expiration of
any option that the purchaser or transferee may have to
transfer or put the loan back to the Federal Deposit
Insurance Corporation.
``(4) Loans transferred by rtc.--
``(A) In general.--For any loan secured by improved real
estate or a mobile home that is sold or transferred by the
Resolution Trust Corporation acting in its corporate capacity
or in its capacity as a conservator or receiver, the
purchaser or transferee of the loan shall determine whether
the property is in an area that has been designated by the
Director as an area having special flood hazards if--
``(i) the Resolution Trust Corporation acquires the loan
after the date of the effectiveness of this subsection and
sells or transfers the loan before the expiration of the 12-
month period beginning on such effective date; or
``(ii) the Corporation holds the loan on the date of the
effectiveness of this subsection and sells or transfers the
loan before the expiration of the 6-month period beginning on
such effective date.
``(B) Notice to director.--A purchaser or transferee of a
loan required to make a determination and notification under
subparagraph (A) shall notify the Director and any servicer
of the loan of the results of the determination (using the
standard hazard determination form under section 1365 of the
National Flood Insurance Act of 1968) before the expiration
of the 90-day period beginning upon the purchase or transfer
of the loan.
``(5) Loans transferred by ncua.--
``(A) In general.--Except as provided in subparagraph (C),
for any loan secured by improved real estate or a mobile home
that is sold or transferred by the National Credit Union
Administration acting in its corporate capacity or in its
capacity as a conservator or liquidating agent, the purchaser
or transferee of the loan shall determine whether the
property is in an area that has been designated by the
Director as an area having special flood hazards.
``(B) Notice to director.--A purchaser or transferee of a
loan required to make a determination and notification under
subparagraph (A) shall notify the Director and any servicer
of the loan of the results of the determination (using the
standard hazard determination form under section 1365 of the
National Flood Insurance Act of 1968) before the expiration
of the 90-day period beginning upon the purchase or transfer
of the loan.
``(C) Exception.--Such determination and notice shall not
be required for any loan sold or transferred to an entity
under the control of the National Credit Union
Administration.
``(6) Applicability.--This subsection shall apply only with
respect to any loan outstanding or entered into after the
expiration of the 1-year period beginning on the date of the
enactment of the National Flood Insurance Reform Act of
1994.''.

SEC. 207. FEES FOR DETERMINING APPLICABILITY OF FLOOD
INSURANCE PURCHASE REQUIREMENTS.

Section 102 of the Flood Disaster Protection Act of 1973
(42 U.S.C. 4012a) as amended by the preceding provisions of
this Act, is further amended by adding at the end the
following new subsection:
``(i) Fee for Determining Location.--Notwithstanding any
other Federal or State law, any lender for a loan described
in paragraph (1), (2), or (3) of subsection (b) may charge a
reasonable fee (as determined by the Director) for the costs
of determining whether the property securing the loan is
located in an area of special flood hazards, but only in
accordance with the following requirements:
``(1) Borrower fee.--The borrower under such a loan may be
charged the fee, but only if the determination is made
pursuant to--
``(A) the making, increasing, extending, or renewing of the
loan that is initiated by the borrower; or
``(B) a revision or updating under section 1360(f) of the
floodplain areas and flood-risk zones or publication of a
notice or compendia under subsection (h) or (i) of section
1360 that affects the area in which the property securing the
loan is located or that, in the determination of the
Director, may reasonably be considered to require a
determination under this subsection.
``(2) Purchaser or transferee fee.--The purchaser or
transferee of such a loan may be charged the fee in the case
of sale or transfer of the loan.''.

SEC. 208. NOTICE REQUIREMENTS.

Section 1364 of the National Flood Insurance Act of 1968
(42 U.S.C. 4104a) is amended to read as follows:

``notice requirements

``Sec. 1364. (a) Notification of Special Flood Hazards.--
``(1) Regulated lending institutions.--Each Federal entity
for lending regulation, after consultation and coordination
with the Financial Institutions Examination Council, shall by
regulation require regulated lending institutions, as a
condition of making, increasing, extending, or renewing any
loan secured by improved real estate or a mobile home located
or to be located in an area that has been identified by the
Director under this title or the Flood Disaster Protection
Act of 1973 as an area having special flood hazards, to
notify the purchaser or lessee (or obtain satisfactory
assurances that the seller or lessor has notified the
purchaser or lessee) and the servicer of the loan of such
special flood hazards, in writing, a reasonable period in
advance of the signing of the purchase agreement, lease, or
other documents involved in the transaction. The regulations
shall also require that the lenders retain a record of the
receipt of the notices by the purchaser or lessee and the
servicer.
``(2) Other lending institutions.--The Secretary of Housing
and Urban Development shall by regulation require
notification in the manner provided under paragraph (1) with
respect to any loan made by another lending institution and
secured by improved real estate consisting of a 1- to 4-
family residence or a mobile home located or to be located in
an area that has been identified by the Director under this
title or the Flood Disaster Protection Act of 1973 as an area
having special flood hazards. Any regulations issued under
this paragraph shall be consistent with and substantially
identical to the regulations issued under paragraph (1)
(except to the extent necessary to provide for differences
between the types of loans for which notice is required under
this paragraph and the types for which notice is required
under paragraph (1)).
``(3) Federal agency lenders.--The appropriate head of each
Federal agency lender shall by regulation require
notification in the manner provided under paragraph (1) with
respect to any loan that is made by the Federal agency lender
and secured by improved real estate or a mobile home located
or to be located in an area that has been identified by the
Director under this title or the Flood Disaster Protection
Act of 1973 as an area having special flood hazards. Any
regulations issued under this paragraph shall be consistent
with and substantially identical to the regulations issued
under paragraph (1).
``(4) Contents of notice.--Written notification required
under this subsection shall include--
``(A) a warning, in a form to be established in
consultation with and subject to the approval of the
Director, stating that the real estate or mobile home
securing the loan is located or is to be located in an area
having special flood hazards;
``(B) a description of the flood insurance purchase
requirements under section 102(b) of the Flood Disaster
Protection Act of 1973;
``(C) a statement that flood insurance coverage may be
purchased under the national flood insurance program and is
also available from private insurers; and
``(D) any other information that the Director considers
necessary to carry out the purposes of the national flood
insurance program.
``(b) Notification of Change of Servicer.--
``(1) Lending institutions.--Each Federal entity for
lending regulation (with respect to regulated lending
institutions) and the Secretary of Housing and Urban
Development (with respect to other lending institutions),
after consultation and coordination with the Financial
Institutions Examination Council, shall by regulation require
such institutions, as a condition of making, increasing,
extending, renewing, selling, or transferring any loan
described in subsection (a)(1), to notify the Director (or
the designee of the Director) in writing during the term of
the loan of the servicer of the loan. Such institutions shall
also notify the Director (or such designee) of any change in
the servicer of the loan, not later than 60 days after the
effective date of such change. The regulations under this
subsection shall provide that upon any change in the
servicing of a loan, the duty to provide notification under
this subsection shall transfer to the transferee servicer of
the loan.
``(2) Federal agency lenders.--The appropriate head of each
Federal agency lender shall by regulation provide for
notification in the manner provided under paragraph (1) with
respect to any loan described in subsection (a)(1) that is
made by the Federal agency lender. Any regulations issued
under this paragraph shall be consistent with and
substantially identical to the regulations issued under
paragraph (1) of this subsection.
``(c) Notification of Expiration of Insurance.--The
Director (or the designee of the Director) shall, not less
than 45 days before the expiration of any contract for flood
insurance under this title, issue notice of such expiration
by first class mail to the owner of the property, the
servicer of any loan secured by the property covered by the
contract, and the owner of the loan.''.

SEC. 209. STANDARD HAZARD DETERMINATION FORMS.

Chapter III of the National Flood Insurance Act of 1968 (42
U.S.C. 4101 et seq.) is amended by adding at the end the
following new section:

``standard hazard determination forms

``Sec. 1365. (a) Development.--The Director, in
consultation with representatives of the mortgage and lending
industry, the Federal entities for lending regulation, the
Federal agency lenders, and any other appropriate
individuals, shall develop standard written and electronic
forms for determining the flood hazard exposure of a property
for use in connection with loans secured by improved real
estate or a mobile home. The written and electronic forms
shall be established by regulations issued not later than 270
days after the date of the enactment of the National Flood
Insurance Reform Act of 1994.
``(b) Design and Contents.--
``(1) Purpose.--The form under subsection (a) shall be
designed to facilitate a determination of the exposure to
flood hazards of structures located on the property to which
the loan application relates. The form shall be designed to
facilitate compliance with the provisions of this title.
``(2) Contents.--The form shall require identification of
the type of flood-risk zone in which the property is located,
the complete map and panel numbers for the property, and the
date of the map used for the determination, with respect to
flood hazard information on file with the Director. If the
property is not located in an area of special flood hazards
the form shall require a statement to such effect and shall
indicate the complete map and panel numbers of the property.
If the complete map and panel numbers for the property are
not available because the property is not located in a
community that is participating in the national flood
insurance program or because no map exists for the relevant
area, the form shall require a statement to such effect. The
form shall provide for inclusion or attachment of any
relevant documents indicating revisions or amendments to
maps.
``(c) Required Use.--The Federal entities for lending
regulation shall by regulation require the use of the form
under this section by regulated lending institutions. The
appropriate head of each Federal agency lender shall by
regulation provide for the use of the form with respect to
any loan made by such Federal agency lender. The Secretary of
Housing and Urban Development shall by regulation require use
of the form in connection with loans purchased by Federal
National Mortgage Association and the Federal Home Loan
Mortgage Corporation and the Government National Mortgage
Association. The Secretary of Housing and Urban Development
shall encourage the use of the form by other lending
institutions.
``(d) Guarantees Regarding Information.--In providing
information regarding special flood hazards on the form
developed under this section (or otherwise required of a
lender not required to use the form under this section) any
lender making, increasing, extending, or renewing a loan
secured by improved real estate or a mobile home may provide
for the acquisition or determination of such information to
be made by a person other than such institution, only to the
extent such person guarantees the accuracy of the
information. The Director shall by regulations establish
requirements relating to the nature and manner of such
guarantees.
``(e) Electronic Form.--The Federal entities for lending
regulation, the Secretary of Housing and Urban Development,
and the appropriate head of each Federal agency lender shall
by regulation require any lender using the electronic form
developed under this section with respect to any loan to make
available upon the request of such Federal entity, Secretary,
or agency head, a written form under this section for such
loan within 48 hours after such request.
``(f) Effective Date.--The regulations under this section
requiring use of the written and electronic forms established
pursuant to this section shall be issued together with the
regulations required under subsection (a) and shall take
effect upon the expiration of the 90-day period beginning on
such issuance.''.

SEC. 210. EXAMINATIONS REGARDING COMPLIANCE.

(a) Amendment to Federal Deposit Insurance Act.--Section 10
of the Federal Deposit Insurance Act (12 U.S.C. 1820) is
amended by adding at the end the following new subsection:
``(h) Flood Insurance Compliance by Insured Depository
Institutions.--
``(1) Examinations.--The appropriate Federal banking agency
shall, during each scheduled on-site examination required by
this section, determine whether the insured depository
institution is complying with the requirements of the
national flood insurance program.
``(2) Report.--
``(A) Requirement.--Not later than 1 year after the date of
enactment of the National Flood Insurance Reform Act of 1994
and biennially thereafter for the next 4 years, each
appropriate Federal banking agency shall submit a report to
the Congress on compliance by insured depository institutions
with the requirements of the national flood insurance
program.
``(B) Contents.--The report shall include a description of
the methods used to determine compliance, the number of
institutions examined during the reporting year, a listing
and total number of institutions found not to be in
compliance, actions taken to correct incidents of
noncompliance, and an analysis of compliance, including a
discussion of any trends, patterns, and problems, and
recommendations regarding reasonable actions to improve the
efficiency of the examinations processes.''.
(b) Amendment to Federal Credit Union Act.--Section 204 of
the Federal Credit Union Act (12 U.S.C. 1784) is amended by
adding at the end the following new subsection:
``(e) Flood Insurance Compliance by Insured Credit
Unions.--
``(1) Examination.--The Board shall, during each
examination conducted under this section, determine whether
the insured credit union is complying with the requirements
of the national flood insurance program.
``(2) Report.--
``(A) Requirement.--Not later than 1 year after the date of
enactment of the National Flood Insurance Reform Act of 1994
and biennially thereafter for the next 4 years, the Board
shall submit a report to Congress on compliance by insured
credit unions with the requirements of the national flood
insurance program.
``(B) Contents.--The report shall include a description of
the methods used to determine compliance, the number of
insured credit unions examined during the reporting year, a
listing and total number of insured credit unions found not
to be in compliance, actions taken to correct incidents of
noncompliance, and an analysis of compliance, including a
discussion of any trends, patterns, and problems, and
recommendations regarding reasonable actions to improve the
efficiency of the examinations processes.''.
(c) Amendment to Federal Housing Enterprises Financial
Safety and Soundness Act of 1992.--Section 1317 of the
Federal Housing Enterprises Financial Safety and Soundness
Act of 1992 (12 U.S.C. 4517) is amended by adding at the end
the following new subsection:
``(g) Flood Insurance Compliance by Enterprises.--
``(1) Examination.--After the submission of the report
under section 210(d) of the National Flood Insurance Reform
Act of 1994, the Director shall, during each annual
examination of an enterprise conducted under this section,
determine whether the enterprise has established adequate
procedures required under section 102(b)(4) of the Flood
Disaster Protection Act of 1973 and is complying with such
procedures.
``(2) Exception.--The provisions of paragraph (1) shall not
apply with respect to an enterprise if the Director--
``(A) determines, pursuant to the report under section
210(d) of the National Flood Insurance Reform Act of 1994,
that the enterprise has established adequate procedures
pursuant to section 102(b)(4) of the Flood Disaster
Protection Act of 1973 and has a pattern of compliance with
such procedures; and
``(B) certifies such finding in writing to the Congress.
``(3) Report.--
``(A) Requirement.--Not later than 1 year after the date of
enactment of the National Flood Insurance Reform Act of 1994
and biennially thereafter for the next 4 years, the Director
shall submit a report to Congress on compliance by the
enterprises with the procedures established pursuant to
section 102(b)(4) of the Flood Disaster Protection Act of
1973.
``(B) Contents.--The report shall include a description of
the methods used to determine compliance, identification of
any enterprise found not to be in compliance, actions taken
to correct incidents of noncompliance, and an analysis of
compliance, including a discussion of any trends, patterns,
and problems, and recommendations regarding reasonable
actions to improve the efficiency of the examinations
processes.''.
(d) GAO Report on GSE Compliance.--Not later than 18 months
after the date of enactment of this Act, the Comptroller
General of the United States shall submit a report to the
Congress and the Director of the Office of Federal Housing
Enterprise Oversight of the Department of Housing and Urban
Development regarding the procedures established by the
Federal National Mortgage Association and the Federal Home
Loan Mortgage Corporation pursuant to section 102(b)(4) of
the Flood Disaster Protection Act of 1973. The report shall
include a description of such procedures, an analysis of
whether such procedures are sufficient to comply with the
requirements of such section, a determination of whether each
enterprise has complied with such procedures, a description
of any actions taken by each enterprise to correct any
incidents of noncompliance, and any recommendations regarding
reasonable actions to improve the procedures established by
the enterprises and compliance with such procedures.

SEC. 211. FINANCIAL INSTITUTIONS EXAMINATION COUNCIL.

Section 1006 of the Federal Financial Institutions
Examination Council Act of 1978 (12 U.S.C. 3305) is amended
by adding at the end the following new subsection:
``(g) The council shall consult and assist the Federal
entities for lending regulation and the Secretary of Housing
and Urban Development in developing and coordinating uniform
standards and requirements for use by lenders as provided
under the National Flood Insurance Act of 1968 and the Flood
Disaster Protection Act of 1973.''.

SEC. 212. CLERICAL AMENDMENTS.

Section 102 of the Flood Disaster Protection Act of 1973
(42 U.S.C. 4012a) is amended--
(1) by striking the section heading and inserting the
following new section heading:

``flood insurance purchase and compliance requirements and escrow
accounts''; and

(2) in subsection (c), by inserting ``Exception to Purchase
Requirements for State-Owned Property.--'' before
``Notwithstanding''.
TITLE III--RATINGS AND INCENTIVES FOR COMMUNITY FLOODPLAIN MANAGEMENT
PROGRAMS

SEC. 301. COMMUNITY RATING SYSTEM AND INCENTIVES FOR
COMMUNITY FLOODPLAIN MANAGEMENT.

Section 1315 of the National Flood Insurance Act of 1968
(42 U.S.C. 4022) is amended--
(1) by inserting after ``Sec. 1315.'' the following: ``(a)
Requirement for Participation in Flood Insurance Program.--
''; and
(2) by adding at the end the following new subsection:
``(b) Community Rating System and Incentives for Community
Floodplain Management.--
``(1) Authority and goals.--The Director shall carry out a
community rating system program to evaluate the measures
adopted by areas (and subdivisions thereof) in which the
Director has made flood insurance coverage available to
provide for adequate land use and control provisions
consistent with the comprehensive criteria for such land
management and use under section 1361, to facilitate accurate
risk-rating, to promote flood insurance awareness, and to
complement adoption of more effective measures for floodplain
and erosion management.
``(2) Incentives.--The program under this subsection shall
provide incentives in the form of adjustments in the premium
rates for flood insurance coverage in areas that the Director
determines have adopted and enforced the goals of the
community rating system under this subsection. In providing
incentives under this paragraph, the Director may provide for
additional adjustments in premium rates for flood insurance
coverage (A) in areas that the Director determines have
implemented measures relating to the protection of natural
and beneficial floodplain functions, and (B) in areas within
which such premium rates have increased as a result of
induced flooding risk from flood control or mitigation
projects, as determined by the Director, except that the
adjustment shall not reduce premium rates below the rate
which would have been charged absent the risk of induced
flooding from the flood control or mitigation projects.
``(3) Funds.--The Director shall carry out the program
under this subsection with amounts, as the Director
determines necessary, from the National Flood Insurance Fund
under section 1310 and any other amounts that may be
appropriated for such purpose.
``(4) Reports.--The Director shall submit a report to the
Congress regarding the program under this subsection not
later than the expiration of the 2-year period beginning on
the date of the enactment of the National Flood Insurance
Reform Act of 1994. The Director shall submit a report under
this paragraph not less than every 2 years thereafter. Each
report under this paragraph shall include an analysis of the
cost-effectiveness and other accomplishments and shortcomings
of the program and any recommendations of the Director for
legislation regarding the program.''.

SEC. 302. FUNDING.

Section 1310(a) of the National Flood Insurance Act of 1968
(42 U.S.C. 4017(a)) is amended--
(1) in paragraph (4), by striking ``and'' at the end;
(2) by redesignating paragraph (5) as paragraph (7); and
(3) by inserting after paragraph (4) the following new
paragraph:
``(5) for carrying out the program under section
1315(b);''.
TITLE IV--MITIGATION OF FLOOD RISKS

SEC. 401. REPEAL OF FLOODED PROPERTY PURCHASE AND LOAN
PROGRAM.

(a) Repeal.--Section 1362 of the National Flood Insurance
Act of 1968 (42 U.S.C. 4103) is hereby repealed.
(b) Transition Phase.--Notwithstanding subsection (a),
during the 1-year period beginning on the date of the
enactment of this Act, the Director of the Federal Emergency
Management Agency may enter into loan and purchase
commitments as provided under section 1362 of such Act (as in
effect immediately before the enactment of this Act).
(c) Savings Provision.--Notwithstanding subsection (a), the
Director shall take any action necessary to comply with any
purchase or loan commitment entered into before the
expiration of the period referred to in subsection (b)
pursuant to authority under section 1362 of the National
Flood Insurance Act of 1968 or subsection (b).

SEC. 402. TERMINATION OF EROSION-THREATENED STRUCTURES
PROGRAM.

(a) In General.--Section 1306 of the National Flood
Insurance Act of 1968 (42 U.S.C. 4013) is amended by striking
subsection (c).
(b) Transition Phase.--Notwithstanding subsection (a),
during the 1-year period beginning on the date of the
enactment of this Act, the Director of the Federal Emergency
Management Agency may pay amounts under flood insurance
contracts for demolition or relocation of structures as
provided in section 1306(c) of the National Flood Insurance
Act of 1968 (as in effect immediately before the enactment of
this Act).
(c) Savings Provision.--Notwithstanding subsection (a), the
Director shall take any action necessary to make payments
under flood insurance contracts pursuant to any commitments
made before the expiration of the period referred to in
subsection (b) pursuant to the authority under section
1306(c) of the National Flood Insurance Act of 1968 or
subsection (b).
(d) Repeal of Findings Provision.--Section 1302 of the
National Flood Insurance Act of 1968 (42 U.S.C. 4001) is
amended by striking subsection (g).

SEC. 403. MITIGATION ASSISTANCE PROGRAM.

(a) In General.--Chapter III of the National Flood
Insurance Act of 1968 (42 U.S.C. 4101 et seq.), as amended by
the preceding provisions of this Act, is further amended by
adding at the end the following new section:

``mitigation assistance

``Sec. 1366. (a) Authority.--The Director shall carry out a
program to provide financial assistance to States,
communities, and individuals, using amounts made available
from the National Flood Mitigation Fund under section 1367,
for planning and carrying out activities designed to reduce
the risk of flood damage to structures covered under
contracts for flood insurance under this title. Such
financial assistance shall be made available to States and
communities in the form of grants under subsection (b) for
planning assistance and to States, communities, and
individuals in the form of grants under this section for
carrying out mitigation activities.
``(b) Planning Assistance Grants.--
``(1) In general.--The Director may make grants under this
subsection to States and communities to assist in developing
mitigation plans under subsection (c)(1).
``(2) Funding.--Of any amounts made available from the
National Flood Mitigation Fund for use under this section in
any fiscal year, the Director may use not more than
$1,500,000 to provide planning assistance grants under this
subsection.
``(3) Limitations.--
``(A) Timing.--A grant under this subsection may be awarded
to a State or community not more than once every 5 years and
each grant may cover a period of 1 to 3 years.
``(B) Single grantee amount.--A grant for planning
assistance may not exceed--
``(i) $150,000, to any State; or
``(ii) $50,000, to any community.
``(C) Cumulative state grant amount.--The sum of the
amounts of grants made under this subsection in any fiscal
year to any one State and all communities located in such
State may not exceed $300,000.
``(c) Eligibility for Mitigation Assistance.--
``(1) States and communities.--To be eligible to receive
financial assistance under this section for mitigation
activities, a State or community shall develop, and have
approved by the Director, a flood risk mitigation plan (in
this section referred to as a `mitigation plan'), that
describes the mitigation activities to be carried out with
assistance provided under this section, is consistent with
the criteria established by the Director under section 1361,
and provides protection against flood losses to structures
covered by contracts for flood insurance under this title.
The mitigation plan shall be consistent with a comprehensive
strategy for mitigation activities for the area affected by
the mitigation plan, that has been adopted by the State or
community following a public hearing.
``(2) Individuals.--An individual shall be eligible to
receive financial assistance under this section only if--
``(A) the individual submits to the Director, and the
Director approves, an application for mitigation assistance
that describes the mitigation activities to be carried out
with assistance provided under this section;
``(B) the assistance provided under this section is to be
used for mitigation activities for a structure that has been
damaged as a result of a flood event that occurred not more
than 60 days before the submission of the application for the
assistance;
``(C) because of damage caused by the flood event,
expenditures are necessary to bring the structure into
compliance with the measures adopted by the applicable State
or community pursuant to section 1315 and the mitigation
activities described in the application will result in such
compliance; and
``(D) the structure was covered by a contract for flood
insurance at the time of the flood event.
``(d) Notification of Approval and Grant Award.--
``(1) General state and community plans.--Except as
provided under paragraph (2), the Director shall notify a
State or community submitting a mitigation plan of the
approval or disapproval of the plan not later than 120 days
after submission of the plan.
``(2) State and community plans for mitigation activities
to respond to flood events.--If a State or community submits
a mitigation plan not later than 15 days after the occurrence
of a flood event that proposes mitigation activities for
structures damaged as a result of the flood event that are
necessary to bring such structures into compliance with the
measures adopted by the applicable State or community
pursuant to section 1315, then the Director shall notify the
State or community of the approval or disapproval of the plan
not later than 30 days after submission of the plan.
``(3) Individual applications for mitigation assistance to
respond to flood events.--The Director shall notify an
individual who submits an application for mitigation
assistance under subsection (c)(2) of the approval or
disapproval of the application not later than--
``(A) 30 days after the submission of the application,
except in cases described in subparagraph (B); or
``(B) in any case in which the structure subject to the
application submitted by the individual is subject to a
mitigation plan subsequently submitted under paragraph (2) by
the State or community in which the structure is located, the
expiration of the 30-day period referred to in paragraph (2).
``(4) Notification of disapproval.--If the Director does
not approve a mitigation plan or application submitted under
this subsection, the Director shall notify, in writing, the
State, community, or individual submitting the plan or
application of the reasons for such disapproval.
``(5) Availability of grant amounts.--Any financial
assistance to be provided under this section to an individual
pursuant to an application for mitigation assistance
submitted and approved under subsection (c)(2) shall be made
available to the individual not later than 15 days after the
individual is notified under paragraph (2) of this subsection
of the approval of the application, unless otherwise agreed
to by the Director and the individual.
``(e) Eligible Mitigation Activities.--
``(1) Determination.--Amounts provided under this section
(other than under subsection (b)) may be used only for
mitigation activities specified in an application for
mitigation assistance or mitigation plan approved by the
Director under subsection (d). The Director may approve only
applications and mitigation plans that specify mitigation
activities that the Director determines are technically
feasible and cost-effective and only such applications and
plans that propose activities that are cost-beneficial to the
National Flood Mitigation Fund. The Director shall provide
assistance under this section to the extent amounts are
available in the National Flood Mitigation Fund pursuant to
appropriation Acts, subject only to the absence of approvable
applications and mitigation plans.
``(2) Priority.--The Director shall make every effort to
provide mitigation assistance under this section for
applications and mitigation plans proposing activities for
repetitive loss structures and structures that have incurred
substantial damage.
``(3) Eligible activities.--The Director shall determine
whether mitigation activities described in an application for
mitigation assistance or a mitigation plan submitted under
subsection (d) comply with the requirements under paragraph
(1). Such activities may include--
``(A) demolition or relocation of any structure located on
land that is along the shore of a lake or other body of water
and is certified by an appropriate State or local land use
authority to be subject to imminent collapse or subsidence as
a result of erosion or flooding;
``(B) elevation, relocation, demolition, or floodproofing
of structures (including public structures) located in
special flood hazard areas or other areas of flood risk;
``(C) acquisition by States and communities of properties
(including public properties) located in special flood hazard
areas or other areas of flood risk and properties
substantially damaged by flood, for public use, as the
Director determines is consistent with sound land management
and use in such area;
``(D) minor physical mitigation efforts that do not
duplicate the flood prevention activities of other Federal
agencies and that lessen the frequency or severity of
flooding and decrease predicted flood damages, which shall
not include major flood control projects such as dikes,
levees, seawalls, groins, and jetties unless the Director
specifically determines in approving a mitigation plan that
such activities are the most cost-effective mitigation
activities for the National Flood Mitigation Fund;
``(E) beach nourishment activities;
``(F) the provision of technical assistance by States to
communities and individuals to conduct eligible mitigation
activities;
``(G) other activities that the Director considers
appropriate and specifies in regulation; and
``(H) other mitigation activities not described in
subparagraphs (A) through (F) or the regulations issued under
subparagraph (G), that are described in the mitigation plan
of a State or community or the application of an individual
for mitigation assistance.
``(f) Limitations on Amount of Assistance.--
``(1) Amount.--The sum of the amounts of mitigation
assistance provided under this section during any 5-year
period may not exceed--
``(A) $10,000,000, to any State;
``(B) $3,300,000, to any community; or
``(C) $20,000, to any individual.
``(2) Geographic.--The sum of the amounts of mitigation
assistance provided under this section during any 5-year
period to any one State and all communities located in such
State may not exceed $20,000,000.
``(3) Waiver.--The Director may waive the dollar amount
limitations under subparagraphs (A) and (B) of paragraph (1)
and paragraph (2) for any State or community for any 5-year
period during which a major disaster or emergency declared by
the President (pursuant to the Robert T. Stafford Disaster
Relief and Emergency Assistance Act) as a result of flood
conditions is in effect with respect to areas in the State or
community.
``(g) Matching Requirement.--
``(1) In general.--The Director may not provide mitigation
assistance under this section to a State, community, or
individual in an amount exceeding 3 times the amount that the
State, community, or individual certifies, as the Director
shall require, that the State, community, or individual will
contribute from non-Federal funds to develop a mitigation
plan or application under subsection (c) and to carry out
mitigation activities under the approved mitigation plan or
application. In no case shall any in-kind contribution by any
State, community, or individual exceed one-half of the amount
of non-Federal funds contributed by the State, community, or
individual.
``(2) 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 mitigation 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.
``(h) Oversight of Mitigation Plans.--The Director shall
conduct oversight of recipients of mitigation assistance
under this section to ensure that the assistance is used in
compliance with the approved mitigation plans or applications
of the recipients and that matching funds certified under
subsection (g) are used in accordance with such
certification.
``(i) Recapture.--
``(1) Noncompliance with plan.--If the Director determines
that a State, community, or individual that has received
mitigation assistance under this section has not carried out
the mitigation activities as set forth in the mitigation plan
or application, the Director shall recapture any unexpended
amounts and deposit the amounts in the National Flood
Mitigation Fund under section 1367.
``(2) Failure to provide matching funds.--If the Director
determines that a State, community, or individual that has
received mitigation assistance under this section has not
provided matching funds in the amount certified under
subsection (g), the Director shall recapture any unexpended
amounts of mitigation assistance exceeding 3 times the amount
of such matching funds actually provided and deposit the
amounts in the National Flood Mitigation Fund under section
1367.
``(j) Reports.--Not later than 1 year after the date of
enactment of the National Flood Insurance Reform Act of 1994
and biennially thereafter, the Director shall submit a report
to the Congress describing the status of mitigation
activities carried out with assistance provided under this
section.
``(k) Definition of Community.--For purposes of this
section, the term `community' means--
``(1) a political subdivision that (A) has zoning and
building code jurisdiction over a particular area of special
flood hazards, and (B) is participating in the national flood
insurance program; or
``(2) a political subdivision of a State, or other
authority, that is designated to develop and administer a
mitigation plan by political subdivisions, all of which meet
the requirements of paragraph (1).''.
(b) Regulations.--Not later than 6 months after date of
enactment of this Act, the Director of the Federal Emergency
Management Agency shall issue regulations to carry out
section 1366 of the National Flood Insurance Act of 1968, as
added by subsection (a).

SEC. 404. ESTABLISHMENT OF NATIONAL FLOOD MITIGATION FUND.

``national flood mitigation fund

``Sec. 1367. (a) Establishment and Availability.--The
Director shall establish in the Treasury of the United States
a fund to be known as the National Flood Mitigation Fund,
which shall be credited with amounts described in subsection
(b) and shall be available, to the extent provided in
appropriation Acts, for providing assistance under section
1366.
``(b) Credits.--The National Flood Mitigation Fund shall be
credited with--
``(1) any premium surcharges assessed under section
1308(f);
``(2) any penalties collected under section 102(f) of the
Flood Disaster Protection Act of 1973; and
``(3) any amounts recaptured under section 1366(i).
``(c) Investment.--If the Director determines that the
amounts in the National Flood Mitigation Fund are in excess
of amounts needed under subsection (a), the Director may
invest any excess amounts the Director determines advisable
in interest-bearing obligations issued or guaranteed by the
United States.
``(d) Report.--The Director shall submit a report to the
Congress not later than the expiration of the 1-year period
beginning on the date of the enactment of this Act and not
less than once during each successive 2-year period
thereafter. The report shall describe the status of the Fund
and any activities carried out with amounts from the Fund.''.
(b) National Flood Insurance Fund as Separate Account.--
Section 1310(a) of the National Flood Insurance Act of 1968
(42 U.S.C. 4017(a)) is amended in the matter preceding
paragraph (1)--
(1) by striking ``is authorized to'' and inserting
``shall''; and
(2) by inserting after ``which shall be'' the following:
``an account separate from any other accounts or funds
available to the Director and shall be''.

SEC. 405. INSURANCE PREMIUM MITIGATION SURCHARGE.

Section 1308 of the National Flood Insurance Act of 1968
(42 U.S.C. 4015) is amended by adding at the end the
following new subsection:
``(f) Insurance Premium Mitigation Surcharge.--
``(1) Assessment.--Notwithstanding any other provision of
this title, the Director shall assess, with respect to each
contract for flood insurance coverage under this title issued
or renewed after the date of the enactment of the National
Flood Insurance Reform Act of 1994, a mitigation surcharge
of--
``(A) $10 per policy term, for policies having a total
coverage amount of $150,000 or less that cover structures
that are principal residences;
``(B) $20 per policy term, for policies having a total
coverage amount of more than $150,000 that cover structures
that are principal residences; and
``(C) the amount established by the Director not to exceed
$40 per policy term, for policies covering other structures.
``(2) Deposit in mitigation fund.--Any mitigation
surcharges collected shall be paid into the National Flood
Mitigation Fund under section 1367.
``(3) Exemption.--The mitigation surcharges shall not be
subject to any agents' commissions, company expenses
allowances, or State or local premium taxes.''.

SEC. 406. STUDY OF MITIGATION INSURANCE.

(a) Study.--The Director of the Federal Emergency
Management Agency shall conduct a study to determine the
feasibility of providing, as part of the flood insurance
policy, insurance coverage to provide for increases in the
costs of repair and reconstruction of repetitively and
substantially flood-damaged insured buildings, in order to
repair, reconstruct, or otherwise mitigate future hazards to
those buildings to comply with local building codes and
floodplain management ordinances to the greatest extent
possible. In conducting the study, the Director shall seek
involvement from other Federal, State, and local agencies,
and representation from the insurance, construction, and
floodplain management interests. Under the study the Director
shall--
(1) identify potential activities related to repair,
reconstruction, or otherwise achieving mitigation required to
comply with standards under the national flood insurance
program and local building codes, and evaluate the costs of
such activities;
(2) evaluate how such insurance coverage could be utilized
to achieve economically justified acquisition, relocation, or
elevation of certain structures under certain circumstances;
(3) evaluate the cost of providing the additional coverage
and investigate a full range of measures for funding such
costs, including changes in coverage, rates, and deductibles;
(4) evaluate the effects changes identified in paragraph
(3) would have on the entire policy base, the cost of flood
insurance, retention of policies, marketing of policies, the
number and magnitude of claims paid, and the economic
soundness and value of flood-prone property, and provide
detail on such effects by State and, for communities
participating in the national flood insurance program, by
community; and
(5) identify mechanisms required to identify qualifying
structures, determine appropriate mitigation measures,
coordinate with State and local officials, provide
consistency with State and local plans and programs, deliver
the increased insurance payments, and verify appropriate
actions by policyholders.
(b) Report.--The Director shall submit to the Congress a
report describing the study not later than the expiration of
the 18-month period beginning on the date of the enactment of
this Act. The report shall include conclusions and
recommendations of the Director in conducting the study.
TITLE V--FLOOD INSURANCE TASK FORCE

SEC. 501. FLOOD INSURANCE INTERAGENCY TASK FORCE.

(a) Establishment.--There is hereby established an
interagency task force to be known as the Flood Insurance
Task Force (in this section referred to as the ``Task
Force'').
(b) Membership.--
(1) In general.--The Task Force shall be composed of 12
members, who shall be the designees of--
(A) the Federal Insurance Administrator;
(B) the Federal Housing Commissioner;
(C) the Secretary of Veterans Affairs;
(D) the Administrator of the Farmers Home Administration;
(E) the Administrator of the Small Business Administration;
(F) a designee of the Financial Institutions Examination
Council;
(G) the chairman of the Board of Directors of the Federal
Home Loan Mortgage Corporation;
(H) the chairman of the Board of Directors of the Federal
National Mortgage Association;
(I) the Under Secretary of Commerce for Oceans and
Atmosphere;
(J) the Director of the United States Fish and Wildlife
Service;
(K) the Administrator of the Environmental Protection
Agency; and
(L) the Secretary of the Army, acting through the Chief of
Engineers.
(2) Qualifications.--Members of the Task Force shall be
designated for membership on the Task Force by reason of
demonstrated knowledge and competence regarding the national
flood insurance program.
(c) Duties.--The Task Force shall carry out the following
duties:
(1) Make recommendations to the head of each Federal agency
and enterprise referred to under subsection (b)(1) regarding
establishment or adoption of standardized enforcement
procedures among such agencies and corporations responsible
for enforcing compliance with the requirements under the
national flood insurance program to ensure fullest possible
compliance with such requirements.
(2) Conduct a study of the extent to which Federal agencies
and the secondary mortgage market can provide assistance in
ensuring compliance with the requirements under the national
flood insurance program and submit to the Congress a report
describing the study and any conclusions.
(3) Conduct a study of the extent to which existing
programs of Federal agencies and corporations for compliance
with the requirements under the national flood insurance
program can serve as a model for other Federal agencies
responsible for enforcing compliance, and submit to the
Congress a report describing the study and any conclusions.
(4) Develop guidelines regarding enforcement and compliance
procedures, based on the studies and findings of the Task
Force, and publish the guidelines in a usable format.
(d) Noncompensation.--Members of the Task Force shall
receive no additional pay by reason of their service on the
Task Force.
(e) Chairperson.--The members of the Task Force shall elect
one member as chairperson of the Task Force.
(f) Meetings and Action.--The Task Force shall meet at the
call of the chairman or a majority of the members of the Task
Force and may take action by a vote of the majority of the
members. The Federal Insurance Administrator shall coordinate
and call the initial meeting of the Task Force.
(g) Officers.--The chairperson of the Task Force may
appoint any officers to carry out the duties of the Task
Force under subsection (c).
(h) Staff of Federal Agencies.--Upon request of the
chairperson of the Task Force, the head of any of the Federal
agencies and corporations referred to under subsection (b)(1)
may detail, on a nonreimbursable basis, any of the personnel
of such agency to the Task Force to assist the Task Force in
carrying out its duties under this Act.
(i) Powers.--In carrying out this section, the Task Force
may hold hearings, sit and act at times and places, take
testimony, receive evidence and assistance, provide
information, and conduct research as the Task Force considers
appropriate.
(j) Subcommittee on Natural and Beneficial Functions of the
Floodplain.--The members of the Task Force appointed under
subparagraphs (I), (J), (K), and (L) of subsection (b)(1)
shall constitute a select subcommittee which, in addition to
carrying out the duties under subsection (c), shall make
recommendations regarding the implementation of the
provisions of the National Flood Insurance Act of 1968 that
deal with protection of the natural and beneficial functions
of the floodplain.
(k) Termination.--The Task Force shall terminate upon the
expiration of the 24-month period beginning upon the
designation of the last member to be designated under
subsection (b)(1).
TITLE VI--MISCELLANEOUS PROVISIONS

SEC. 601. EXTENSION OF FLOOD INSURANCE PROGRAM.

(a) In General.--Section 1319 of the National Flood
Insurance Act of 1968 (42 U.S.C. 4026) is amended by striking
``September 30, 1995'' and inserting ``September 30, 1996''.
(b) Emergency Implementation.--Section 1336(a) of the
National Flood Insurance Act of 1968 (42 U.S.C. 4056(a)) is
amended by striking ``September 30, 1995'' and inserting
``September 30, 1996''.

SEC. 602. LIMITATION ON PREMIUM INCREASES.

(a) Property-Specific Limitation.--Section 1308 of the
National Flood Insurance Act of 1968 (42 U.S.C. 4013(b)) is
amended--
(1) in subsection (c), by striking ``Notwithstanding any
other provision of this title'' and inserting ``Subject only
to the limitation under subsection (e)''; and
(2) by inserting after subsection (d) the following new
subsection:
``(e) Annual Limitation on Premium Increases.--
Notwithstanding any other provision of this title, the risk
premium rate for flood insurance that is charged under this
title for any property may not be increased in an amount that
would result in such rate increases for the property during
any 12-month period exceeding 10 percent of the amount of the
risk premium rate applicable to the property upon the
commencement of such 12-month period.''.
(b) Repeal of Program-Wide Limitation.--Subsection (d) of
section 541 of the Housing and Community Development Act of
1987 (42 U.S.C. 4015 note) is hereby repealed.

SEC. 603. MAXIMUM FLOOD INSURANCE COVERAGE AMOUNTS.

(a) In General.--Section 1306(b) of the National Flood
Insurance Act of 1968 (42 U.S.C. 4013(b)) is amended as
follows:
(1) Residential property.--In paragraph (2), by striking
``an amount of $150,000 under the provisions of this clause''
and inserting the following: ``a total amount (including such
limits specified in paragraph (1)(A)(i)) equal to the dollar
amount limitation pursuant to section 305(a)(2) of the
Federal Home Loan Mortgage Corporation Act in effect for a
single-family residence''.
(2) Residential property contents.--In paragraph (3), by
striking ``an amount of $50,000 under the provisions of this
clause'' and inserting the following: ``a total amount
(including such limits specified in paragraph (1)(A)(ii)) of
$100,000''.
(3) Nonresidential property and contents.--By striking
paragraph (4) and inserting the following new paragraph:
``(4) in the case of any nonresidential property, including
churches, for which the risk premium rate is determined in
accordance with the provisions of section 1307(a)(1),
additional flood insurance in excess of the limits specified
in subparagraphs (B) and (C) of paragraph (1) shall be made
available to every insured upon renewal and every applicant
for insurance, in respect to any single structure, up to a
total amount (including such limits specified in subparagraph
(B) or (C) or paragraph (1), as applicable) of $500,000 for
each structure and $500,000 for any contents related to each
structure; and''.
(b) Removal of Ceiling on Coverage Required.--Section
1306(b) of the National Flood Insurance Act of 1968 (42
U.S.C. 4013(b)) is amended--
(1) in paragraph (5), by striking ``; and'' at the end and
inserting a period; and
(2) by striking paragraph (6).

SEC. 604. FLOOD INSURANCE PROGRAM ARRANGEMENTS WITH PRIVATE
INSURANCE ENTITIES.

Section 1345(b) of the National Flood Insurance Act of 1968
(42 U.S.C. 4081(b)) is amended by striking the period at the
end and inserting the following: ``and without regard to the
provisions of the Federal Advisory Committee Act (5 U.S.C.
App.).''.

SEC. 605. UPDATING OF FLOOD MAPS.

Section 1360 of the National Flood Insurance Act of 1968
(42 U.S.C. 4101) is amended by adding at the end the
following new subsections:
``(e) Review of Flood Maps.--Once during each 5-year period
(the 1st such period beginning on the date of the enactment
of the National Flood Insurance Reform Act of 1994) or more
often as the Director determines necessary, the Director
shall assess the need to revise and update all floodplain
areas and flood risk zones identified, delineated, or
established under this section.
``(f) Updating Flood Maps.--The Director shall revise and
update any floodplain areas and flood-risk zones--
``(1) upon the determination of the Director, according to
the assessment under subsection (e), that revision and
updating are necessary for the areas and zones; or
``(2) upon the request from any State or local government
stating that specific floodplain areas or flood-risk zones in
the State or locality need revision or updating, if
sufficient technical data justifying the request is submitted
and the unit of government making the request agrees to
provide funds in an amount equal to the amount of funds
provided by the Director (or the equivalent value of data,
technical analysis, or other in-kind services) for the
requested revision or update.
``(g) Availability of Flood Maps.--To promote compliance
with the requirements of this title, the Director shall make
flood insurance rate maps and related information available
free of charge to State agencies directly responsible for
coordinating the national flood insurance program and to
appropriate representatives of communities participating in
the national flood insurance program, and at a reasonable
cost to all other persons. Any receipts resulting from this
subsection shall be deposited in the National Flood Insurance
Fund, pursuant to section 1310(b)(6).
``(h) Notification of Flood Map Changes.--The Director
shall cause notice to be published in the Federal Register
(or shall provide notice by another comparable method) of any
change to flood insurance map panels and any change to flood
insurance map panels issued in the form of a letter of map
amendment or a letter of map revision. Such notice shall be
published or otherwise provided not later than 30 days after
the map change or revision becomes effective. Notice by any
method other than publication in the Federal Register shall
include all pertinent information, provide for regular and
frequent distribution, and be at least as accessible to map
users as notice in the Federal Register. All notices under
this subsection shall include information on how to obtain
copies of the changes or revisions.
``(i) Compendia of Flood Map Changes.--Every 6 months, the
Director shall publish separately in their entirety within a
compendium, all changes and revisions to flood insurance map
panels and all letters of map amendment and letters of map
revision for which notice was published in the Federal
Register or otherwise provided during the preceding 6 months.
The Director shall make such compendia available, free of
charge, to States and communities participating in the
national flood insurance program pursuant to section 1310 and
at cost to all other parties. Any receipts resulting from
this subsection shall be deposited in the National Flood
Insurance Fund, pursuant to section 1310(b)(6).''.

SEC. 606. TECHNICAL MAPPING ADVISORY COUNCIL.

(a) Establishment.--There is established a council to be
known as the Technical Mapping Advisory Council (in this
section referred to as the ``Council'').
(b) Membership.--
(1) In general.--The Council shall consist of the Director
of the Federal Emergency Management Agency, or the Director's
designee, and 11 additional members to be appointed by the
Director or the designee of the Director, and shall include--
(A) the Under Secretary of Commerce for Oceans and
Atmosphere (or his or her designee);
(B) a member of recognized surveying and mapping
professional associations and organizations;
(C) a member of recognized professional engineering
associations and organizations;
(D) a member of recognized professional associations or
organizations representing flood hazard determination firms;
(E) a representative of the United States Geologic Survey;
(F) a representative of State geologic survey programs;
(G) a representative of State national flood insurance
coordination offices; and
(H) a representative of a regulated lending institution.
(2) Qualifications.--Members of the Council shall be
appointed based on their demonstrated knowledge and
competence regarding surveying, cartography, remote sensing,
geographic information systems, or the technical aspects of
preparing and using flood insurance rate maps.
(c) Duties.--The Council shall--
(1) make recommendations to the Director on how to improve
in a cost-effective manner the accuracy, general quality,
ease of use, and distribution and dissemination of flood
insurance rate maps;
(2) recommend to the Director mapping standards and
guidelines for flood insurance rate maps; and
(3) submit an annual report to the Director that contains--
(A) a description of the activities of the Council;
(B) an evaluation of the status and performance of flood
insurance rate maps and mapping activities to revise and
update flood insurance rate maps, as established pursuant to
the amendment made by section 605; and
(C) a summary of recommendations made by the Council to the
Director.
(d) Chairperson.--The members of the Council shall elect 1
member to serve as the chairperson of the Council (in this
section referred to as the ``Chairperson'').
(e) Coordination.--To ensure that the Council's
recommendations are consistent to the maximum extent
practicable with national digital spatial data collection and
management standards, the Chairperson shall consult with the
Chairperson of the Federal Geographic Data Committee
(established pursuant to OMB Circular A-16).
(f) Compensation.--Members of the Council shall receive no
additional compensation by reason of their service on the
Council.
(g) Meetings and Actions.--
(1) In general.--The Council shall meet not less than twice
each year at the request of the Chairperson or a majority of
its members and may take action by a vote of the majority of
the members.
(2) Initial meeting.--The Director, or a person designated
by the Director, shall request and coordinate the initial
meeting of the Council.
(h) Officers.--The Chairperson may appoint officers to
assist in carrying out the duties of the Council under
subsection (c).
(i) Staff of the Federal Emergency Management Agency.--Upon
the request of the Chairperson, the Director may detail, on a
nonreimbursable basis, personnel of the Federal Emergency
Management Agency to assist the Council in carrying out its
duties.
(j) Powers.--In carrying out this section, the Council may
hold hearings, receive evidence and assistance, provide
information, and conduct research as it considers
appropriate.
(k) Termination.--The Council shall terminate 5 years after
the date on which all members of the Council have been
appointed under subsection (b)(1).

SEC. 607. EVALUATION OF EROSION HAZARDS.

(a) Report Requirement.--The Director of the Federal
Emergency Management Agency (in this section referred to as
the ``Director'') shall submit a report under this section to
the Congress evaluating erosion hazards, determining the
economic impact of erosion hazards, and assessing the costs
and benefits of mapping erosion hazard areas.
(b) Erosion Hazard Areas and NFIP Costs.--The report
required under this section shall--
(1) identify all communities that are likely to be
identified as having erosion hazard areas;
(2) estimate the amount of flood insurance claims under the
national flood insurance program that are attributable to
erosion;
(3) state the amount of flood insurance claims under such
program that are attributable to claims under section 1306(c)
of the National Flood Insurance Act of 1968;
(4) assess the full economic impact of erosion on the
National Flood Insurance Fund; and
(5) determine the costs and benefits of expenditures
necessary from the National Flood Insurance Fund to complete
mapping of erosion hazard areas.

To identify communities under paragraph (1), the Director may
map a statistically valid and representative number of
communities with erosion hazard areas throughout the United
States, including coastal, Great Lakes, and, if
technologically feasible, riverine areas. The information
provided under this subsection shall take into consideration
the efforts of State and local governments to assess,
measure, and reduce erosion hazards.
(c) Economic Impact.--The report under this section shall--
(1) assess the economic impact of--
(A) the mapping of erosion hazard areas;
(B) the denial of flood insurance for structures that are
newly constructed in whole in communities likely to be
identified as having erosion hazard areas and the
establishment of actuarial rates for existing structures in
such communities;
(C) the denial of flood insurance pursuant to existing
requirements for coverage under the national flood insurance
program; and
(D) erosion hazard management activities undertaken by
State and local governments, including building restrictions,
beach nourishment, construction of sea walls and levees, and
other activities that reduce the risk of damage due to
erosion; and
(2) address the economic impact of designating erosion
hazard areas on--
(A) the value of residential and commercial properties in
communities with erosion hazards;
(B) community tax revenues due to potential changes in
property values or commercial activity;
(C) employment, including the potential loss or gain of
existing and new jobs in the community;
(D) existing businesses and future economic development;
and
(E) the estimated cost of Federal and State disaster
assistance to flood victims.
(d) Costs and Benefits of Mapping.--The report under this
section shall--
(1) determine the costs and benefits of mapping erosion
hazard areas, based upon the Director's estimate of the
actual and prospective amount of flood insurance claims
attributable to erosion, and if the Director determines that
the savings to the National Flood Insurance Fund will exceed
the cost of mapping erosion hazard areas, the report shall
assess whether using flood insurance premiums for costs of
mapping erosion hazard areas is cost-beneficial compared to
alternative uses of such amounts, including--
(A) funding the mitigation assistance program under section
1366 of the National Flood Insurance Act of 1968 (as added by
section 403 of this Act); and
(B) funding a program that would provide additional
coverage under the national flood insurance program for
compliance with land use and control measures; and
(C) reviewing, revising, and updating flood insurance rate
maps under subsections (e) and (f) of section 1360 of the
National Flood Insurance Act of 1968 (as added by the
amendment made by section 605 of this Act);
(2) if the Director determines under subsection (b) that
mapping of riverine areas for erosion hazard areas is
technologically feasible, determine the costs and benefits of
mapping erosion in riverine areas; and
(3) determine the costs and benefits of mapping erosion,
other than those directly related to the financial condition
of the National Flood Insurance Program, and the costs of not
mapping erosion.
(e) Definition.--For purposes of this section, the term
``erosion hazard area'' means, based on erosion rate
information and other historical data available, an area
where erosion or avulsion is likely to result in damage to or
loss of buildings and infrastructure within a 60-year period.
(f) Procedure.--
(1) Preparation and submission.--The report required under
this section shall be prepared by a private independent
entity selected by the Director. The Director shall submit
the report to the Congress as soon as practicable, but not
later than 2 years after the date of the enactment of this
Act.
(2) Consultation.--In preparing the report, the private
entity shall consult with--
(A) a statistically valid and representative number of
communities likely to be identified as having erosion hazard
areas;
(B) representatives from State coastal zone management
programs approved under section 306 of the Coastal Zone
Management Act of 1972;
(C) the Administrator of the National Oceanic and
Atmospheric Administration;
(D) the Director of the Federal Emergency Management
Agency; and
(E) and any other persons, officials, or entities that the
Director considers appropriate.
(g) Availability of National Flood Insurance Fund.--Section
1310(a) of the National Flood Insurance Act of 1968 (42
U.S.C. 4017(a)) is amended--
(1) in the matter preceding paragraph (1), by inserting
``(except as otherwise provided in this section)'' after
``without fiscal year limitation''; and
(2) by inserting after paragraph (5) (as added by the
preceding provisions of this Act) the following new
paragraph:
``(6) for costs of preparing the report under section 607
of the National Flood Insurance Reform Act of 1994, except
that the fund shall be available for the purpose under this
paragraph in an amount not to exceed an aggregate of
$5,000,000 over the 2-year period beginning on the date of
the enactment of the National Flood Insurance Reform Act of
1994; and''.

SEC. 608. STUDY OF ECONOMIC EFFECTS OF CHARGING ACTUARIALLY-
BASED PREMIUM RATES FOR PRE-FIRM STRUCTURES.

(a) Study.--The Director of the Federal Emergency
Management Agency (in this section referred to as the
``Director'') shall conduct a study of the economic effects
that would result from increasing premium rates for flood
insurance coverage made available under the national flood
insurance program for pre-FIRM structures to the full
actuarial risk based premium rate determined under section
1307(a)(1) of the National Flood Insurance Act of 1968 for
the area in which the property is located. In conducting the
study, the Director shall--
(1) determine each area that would be subject to such
increased premium rates; and
(2) for each such area, determine--
(A) the amount by which premium rates would be increased;
(B) the number and types of properties affected and the
number and types of properties covered by flood insurance
under this title likely to cancel such insurance if the rate
increases were made;
(C) the effects that the increased premium rates would have
on land values and property taxes; and
(D) any other effects that the increased premium rates
would have on the economy and homeowners.
(b) Definition of ``Pre-FIRM Structure''.--For purposes of
subsection (a), the term ``pre-FIRM structure'' means a
structure that was not constructed or substantially improved
after the later of--
(1) December 31, 1974; or
(2) the effective date of the initial rate map published by
the Director under section 1360(a)(2) of the National Flood
Insurance Act of 1968 for the area in which such structure is
located.
(c) Report.--The Director shall submit a report to the
Congress describing and explaining the findings of the study
conducted under this section. The report shall be submitted
not later than 12 months after the date of the enactment of
this Act.

SEC. 609. EFFECTIVE DATES OF POLICIES.

(a) 30-Day Delay.--Section 1306 of the National Flood
Insurance Act of 1968 (42 U.S.C. 4013), as amended by the
preceding provisions of this Act, is further amended by
adding at the end the following new subsection:
``(c) Effective Date of Policies.--
``(1) Waiting period.--Except as provided in paragraph (2),
coverage under a new contract for flood insurance coverage
under this title entered into after the date of the enactment
of the National Flood Insurance Reform Act of 1994, and any
modification to coverage under an existing flood insurance
contract made after such date, shall become effective upon
the expiration of the 30-day period beginning on the date
that all obligations for such coverage (including completion
of the application and payment of any initial premiums owed)
are satisfactorily completed.
``(2) Exception.--The provisions of paragraph (1) shall not
apply to coverage under a flood insurance contract for newly
constructed property and coverage for newly acquired
property, that is obtained before or upon the completion of
the construction or transfer of title to the property, as
applicable.''.
(b) Study.--The Director of the Federal Emergency
Management Agency shall conduct a study to determine the
appropriateness of existing requirements regarding the
effective date and time of coverage under flood insurance
contracts obtained through the national flood insurance
program. In conducting the study, the Director shall
determine whether any delay between the time of purchase of
flood insurance coverage and the time of initial
effectiveness of the coverage should differ for various
classes of properties (based upon the type of property,
location of the property, or any other factors related to the
property) or for various circumstances under which such
insurance was purchased. Not later than the expiration of the
6-month period beginning on the date of the enactment of this
Act, the Director shall submit to the Congress a report on
the results of the study.

SEC. 610. REGULATIONS.

The Director of the Federal Emergency Management Agency,
the Secretary of Housing and Urban Development, and any
appropriate head of any Federal agency may each issue any
regulations necessary to carry out the applicable provisions
of this Act and the applicable amendments made by this Act.

SEC. 611. RELATION TO STATE AND LOCAL LAWS.

This Act and the amendments made by this Act may not be
construed to preempt, annul, alter, amend, or exempt any
person from compliance with any law, ordinance, or regulation
of any State or local government with respect to land use,
management, or control.

The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Massachusetts [Mr. Kennedy] will be recognized for 20 minutes, and the
gentleman from California [Mr. McCandless] will be recognized for 20
minutes.
The Chair recognizes the gentleman from Massachusetts [Mr. Kennedy].
Mr. KENNEDY. Mr. Speaker, I yield such time as he may consume to the
gentleman from Texas [Mr. Gonzalez], the chairman of the full Committee
on Banking, Finance and Urban Affairs.
(Mr. GONZALEZ asked and was given permission to revise and extend his
remarks.)
Mr. GONZALEZ. Mr. Speaker, I rise in support of H.R. 3191, a bill to
reauthorize the National Flood Insurance Program.
Let me first commend the work of the members of the Banking
Committee's Subcommittee on Consumer Credit and Insurance, chaired by
Congressman Joe Kennedy. Chairman Kennedy and his ranking member on the
minority side, Congressman Al McCandless, worked hard to bring strong
bipartisan support for this bill. H.R. 3193 was reported from the
Banking Committee on a 40-to-10 vote. I am pleased to report that
further modifications have been made to satisfy the objections of those
Members who had concerns about erosion zone mapping provisions in the
version of the bill passed by the committee.
We must reauthorize the national flood insurance as soon as possible.
We cannot afford to do otherwise. Without a viable Federal flood
insurance program, every time property damage is caused by rising flood
waters, we would be hard pressed to deny our constituents' appeals for
financial assistance.
To provide flood insurance when the private insurance companies could
not do so, the Congress first established the National Flood Insurance
Program in 1968. But, the present program is flawed and in debt because
it is too easy for those living in flood prone areas to roll the dice,
drop out of the flood insurance program, and take their chances with
Mother Nature. H.R. 3191 remedies these problems by strengthening
mandatory insurance purchase requirements and takes other appropriate
steps to ensure that there will be adequate funds to honor future
insurance claims. These actions at the same time control the premium
price increases. Let me assure my colleagues that cost to taxpayers for
participation on the Federal flood insurance program will remain
affordable.
The legislation before the House today makes sweeping and necessary
changes to the Flood Insurance Program. They deserve your support. Vote
``aye'' on H.R. 3191.
Mr. KENNEDY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I want to thank the chairman of this committee, Mr.
Gonzalez, as well as the ranking member, Mr. Leach, for their efforts
to bring this legislation to the floor today. Let me also acknowledge
the ranking member of the Consumer Subcommittee, Mr. McCandless, for
all of his hard work in moving this bill through the committee
successfully. I want to particularly commend Mr. Bacchus of Florida for
his constructive suggestions which have helped to improve the bill.
Most importantly, I want to recognize Mr. Bereuter. No one has done
more than he to awaken the Congress to the need to reform this program,
and his handiwork can be seen in many of the provisions of the bill we
consider today.
Mr. Speaker, H.R. 3191, The National Flood Insurance Reform Act of
1994, contains several much-needed reforms to the National Flood
Insurance Program. This program was established in 1968 by Congress to
provide federally backed flood insurance to homes and businesses
located in flood-prone areas.
As of today, this program is technically insolvent. Premiums paid
into the flood insurance fund are not keeping up with claims paid out
of it. Consequently, FEMA was forced earlier this year to borrow $100
million from the Treasury. If long-range weather forecasts of increased
flooding hold true, and if the income to the program remains
inadequate, we face the prospect of a taxpayer bailout of the flood
program. Such a bailout was required in the mid-1980's, when $1.2
billion of taxpayer funds were needed to keep the fund solvent.
The bill that we have brought to the floor today contains three
primary reforms that are intended to prevent another bailout:
First, it will increase the number of people covered by flood
insurance. The program suffers from an extremely low participation
rate. Nationwide, only 17 percent of all homes located in flood hazard
areas are covered by flood insurance. In the Midwest States most hard-
hit by last year's floods, the compliance rate is even lower--about 10
percent. If everyone affected by these floods had had flood insurance,
the Federal Government's cost of cleaning up the disaster would've been
cut by close to $2 billion, and homeowners would have received more in
insurance payments than they received in disaster aid. So flood
insurance is a win-win proposition: The more people who have it, the
better for them and the Federal taxpayer.
To improve participation in the flood program, H.R. 3191 requires
lenders to escrow flood insurance premiums where they are already
escrowing for other purposes. That way, a homeowner will not be able to
discontinue paying for flood insurance after a year or two, as so often
happens today. It also requires lenders to force-place flood insurance
if a borrower in a flood-hazard area refuses to buy it as required by
law. And it will require mortgage bankers--who make half of all
mortgages today--to meet the same standards as federally insured banks
and thrifts when it comes to enforcing flood insurance purchase
requirements. These changes will go a long way toward improving the
financial health of the fund, and at the same time give more homeowners
the protection of flood insurance.

The second reform contained in H.R. 3191 is the creation of a
mitigation fund to help homeowners and communities reduce the risk of
flood damage. This fund will provide up to $65 million per year to
relocate and elevate homes, to nourish beaches, and to build sea walls
and levees. Individuals who suffer from major flooding will get
particular attention from this provision; FEMA will have to pass on
their application within 30 days, so they can get the help they need to
rebuild to safe standards. This fund is based on the adage that an
ounce of prevention is worth a pound of cure. It will save money for
the program, and save heartache for the homeowner.
The third major reform in this legislation is a study of the problem
of erosion. According to the Army Corps of Engineers, 25 percent of our
Nation's coastline is currently eroding at varying rates of speed. Many
State and local governments have taken steps to deal with this reality.
North Carolina has banned construction in erosion-prone areas since
1974. South Carolina has had such a ban since 1988. In Maryland, the
town of Ocean City has built jetties, and regularly replenishes its
beaches.
The Federal Government has yet to come to grips with the problem of
erosion. We continue to insure properties built on land that could be
literally washed away in a few years. Many have asked whether that is a
risk worth taking. H.R. 3191 will help us get answers to that question.
It requires FEMA to assess where erosion is happening, how communities
are dealing with it, and what its impact is on the flood program. I am
confident that the information we get from this study will allow us to
make wise policy choices in the future that both protect the taxpayer
and support coastal and river economies.
In sum, this legislation will bring about urgently needed reforms in
the Federal Flood Insurance Program. It will help avoid a taxpayer
bailout, and increase the number of homes and businesses protected by
flood insurance. I urge its adoption.
Mr. Speaker, I reserve the balance of my time.
Mr. McCANDLESS. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, the bill we are considering this morning is a compromise
bill to reform the National Flood Insurance Program [NFIP]. The NFIP is
administered by the Federal Emergency Management Agency [FEMA] and
enables property owners in participating communities to purchase
insurance coverage against flood-related damage. Many of the changes
that the bill makes to the flood insurance program are supported by
FEMA and other organizations--both public and private--who work with
FEMA to administer the flood insurance program.
The original version of this bill was passed by the Banking Committee
last year with bipartisan support--40-10. I think the changes that are
included in this compromise bill will enjoy even greater support.
The bill is intended to accomplish three objectives. First to
increase the participation rate in the National Flood Insurance
Program. Second, to encourage States, communities, and individuals to
mitigate the effects of future flooding. Finally, to assess the
economic impact of mapping--or not mapping--erosion hazard areas.
Although the bill is straight forward, I want to discuss the areas
mentioned.

increased participation

According to FEMA, only abut 17 percent of those who live in special
flood hazard areas and who should have flood insurance policyholders.
The bill requires lenders who make mortgages in such areas to make sure
that flood insurance is in place whenever they make increase, extend,
or renew a mortgage. In addition, this bill requires lenders to escrow
for flood insurance payments if they escrow for other items and
authorizes them to purchase flood insurance for borrowers who fail to
do so.
The provisions of the bill concerning increased participation are
supported by the American Bankers Association and the Mortgage Bankers
Association.

mitigation activities

This bill institutes a self-sustaining grant program to fund
activities to mitigate or minimize the effects of future flooding.
While the original bill only made States and communities eligible for
such grants, this compromise bill makes individuals eligible as well.
The bill is not intended to promote large-scale construction projects
such as dams or levies. Rather, it is intended to encourage States,
communities, and individuals to elevate relocate or demolish structures
that are repeatedly flooded.
While this bill lists a number of activities that are eligible for
grants, it permits FEMA to approve only those that it determines are
cost-effective to the Flood Insurance Program.

study of mapping erosion hazard areas

The provisions of this compromise bill are quite different than those
of the original bill with regard to the issue of erosion. Instead of
requiring FEMA to map coastal areas subject to high rates of erosion,
this compromise bill requires a comprehensive study of the issue. The
study, which will be performed by an independent organization and which
is due in 2 years, should give Congress the information it needs to
decide whether the availability of flood insurance should be restricted
in some areas.
The provisions of this bill concerning the study of erosion are
supported by the National Association of Realtors and the National
Association of Homebuilders.
I want to reiterate to my colleagues that it is important we pass
this bill. While it may not solve all of the flood insurance problems,
it contains many provisions that will go a long way toward addressing
them.
The House and Senate Banking Committees will soon meet to reconcile
differences between two bills concerning community development banks.
The Senate included in its bill language to reform the National Flood
Insurance Program. It is important that we pass this bill to ensure
that the interests of our Members are represented at that conference.
Mr. Speaker, I encourage my colleagues to support this bill.

{time} 1300

Mr. Speaker, I am very pleased to yield 5 minutes to the gentleman
from Nebraska [Mr. Bereuter], who has spent so much time on this bill.
(Mr. BEREUTER asked and was given permission to revise and extend his
remarks.)
Mr. BEREUTER. Mr. Speaker, I rise in support of this legislation.
However, I regret to say that the measure represents a very modest
reform indeed and does not really provide real reform to the National
Flood Insurance Program in many areas. Nevertheless, we are making some
steps forward, and I realize that the chairman of the subcommittee, the
gentleman from Massachusetts [Mr. Kennedy], had to make some
compromises to move the legislation to this stage so we are able to
engage in a conference on this subject with our colleagues in the other
body.
I very much appreciate the gentleman's kind words, as well as those
of the gentleman from California [Mr. McCandless], with respect to my
involvement in this issue. I would have to share credit, I must say,
with two of our former colleagues, Ben Erdreich of Alabama and Tom
Carper of Delaware. Those two gentlemen with this Member advanced
legislation in the previous Congress which was very strong legislation
indeed and which passed this body, and indeed the portions relating to
lender compliance and also community rating systems are based, I think
it is far to say, on work accomplished in that previous legislation.
The NFIP was created in 1968 to provide otherwise unobtainable flood
insurance to flood-prone properties throughout the United States. But
the NFIP is failing in its mission. It is now:
Riddled with opportunities for ridiculous abuse by property owners,
Faced with an insolvent insurance fund, due in large part, to abysmal
lender compliance; and
Operating as a huge interstate and intrastate cross-subsidy program
for owners of repetitive-loss structures and for property owners
located on some hazardous beaches, lakeshores, and river flood plains.
Now let me list a few of the very specific weaknesses of the NFIP. It
is vital for this Congress to enact a NFIP reform bill, as the problems
facing the program are readily apparent. Below, I would like to
highlight at least three major areas of deficiencies with the existing
NFIP.
First, the program currently allows policyholders in areas of the
country that are repeatedly hit by heavy rains and storms to use their
flood insurance policy to regularly rebuild and refurnish their
repetitive-loss buildings. Some homeowners along the lower reaches of
the Mississippi River system refer to it as the ``carpet renewal''
policy, since they are hit with river flooding every 6 or 7 years and
use the Government payments to replace their water-damaged carpet.
According to data provided by the Federal Insurance Administration
[FIA], these types of repetitive loss structures are not uniformly
distributed across the Nation. Two States, Louisiana and Texas, account
for 44.5 percent of all repetitive losses. Ten States account for 83.1
percent of these losses.
Second, the Federal Government, through the NFIP, is literally giving
away major insurance benefits to beachfront property owners.
According to data provided by the National Academy of Sciences,
continued insurance of structures located on the eroding coastlines
will pose a significant financial threat to the NFIP. The scientific
community has concluded that the Nation's Atlantic and gulf shorelines
are severely eroding in many areas and will continue to move in future
years. This, in turn, will have an impact on the solvency of the NFIP,
since the program is not including these long-term erosion hazards in
its insurance rate calculations.
As a result, we have a situation in which NFIP will be bailing out
more beach-front property owners at the expense of the policyholders in
other parts of the country. It is reported that as many as 43 percent
of all policyholders may pay less than 34 percent of the proper risk-
based premium costs to insure their home or business.
Third, we must recognize a massive failure on the part of lenders to
comply with existing law that requires flood insurance as a condition
for obtaining a mortgage if the structure is located in a flood-prone
area. FIA estimates that NFIP is covering only the 18 percent of the
total number of homes and other types of structures that should be
covered by a flood insurance policy.
But to its credit, H.R. 3191 does improve lender compliance with the
National Flood Insurance Program by prohibiting federally regulated
lenders, and mortgage bankers, from making, extending, or renewing any
loan secured by property in a special flood area unless flood insurance
is in effect for the term of the loan.
Increasing lender compliance is a step in the right direction, but as
a representative of the National Taxpayers Union has said, it's really
just ``adding a bucket without turning off the faucet.''
Another provision in H.R. 3191 provides that to be eligible for flood
insurance benefits, an individual must have purchased flood insurance
30 days prior to a flood event. This provision, which this Member
originated and advocated, does greatly improve the NFIP by eliminating
the current situation where an individual can see the flood waters
rising before actually purchasing flood insurance. Under current FEMA
regulations, flood insurance can be purchased in as little as 5 days
before flooding occurs.
Also, the bill does provide for individual mitigation grants of up to
$20,000--subject to a 25-percent match requirement--to move some flood
insurance beneficiaries out of high risk flood zones or to bring
structures in flood zones up to appropriate levels of safety from
flooding.
Where the bill really fails, however, is in the fact that it does
nothing to deter new construction in erosion zones. The study called
for in the bill is simply a delaying tactic to put off real reform and
continues to expose the NFIP to the risk of insolvency as flood
insurance is made available to structures located in high risk erosion
zones.
Real reform has been opposed nationally by the National Association
of Realtors and the National Association of Homebuilders who are
putting the interests of a small number of their members ahead of the
solvency of the National Flood Insurance Program and the interest of
the American taxpayers who will be forced to bail out the fund when the
inevitable bankruptcy of the fund occurs.
Mr. Speaker, real reform of the NFIP would, at the very least,
discourage new construction and new flood insurance coverage in high
risk erosion zones. This legislation does not. While it does not expose
the flood insurance fund to additional risk, it does little to ensure
the long-term solvency of the fund.
Mr. Speaker, I regret that we will be forced to revisit this issue
again because we are unwilling to make the choices necessary to ensure
its solvency now.

{time} 1310

Mr. McCANDLESS. Mr. Speaker, I yield 2 minutes to the gentleman from
New York [Mr. Lazio], a member of the subcommittee and the Committee on
Banking, Finance and Urban Affairs.
(Mr. LAZIO asked and was given permission to revise and extend his
remarks.)
Mr. LAZIO. Mr. Speaker, I rise today in support of the committee
amendment to H.R. 3191, the National Flood Insurance Reform Act.
I represent thousands of middle-class coastal residents who would
have been adversely affected by this bill as reported by the House
Banking Committee. The economic recovery has yet to show signs of life
on Long Island and the committee provisions of sections 407 and 604
would have further depressed the real estate industry in my district.
Thanks to the work of the subcommittee chairman, the ranking member
of the subcommittee, Mr. McCandless and his staff, and the
distinguished Member from Florida, Mr. Bacchus, a sound compromise is
before the House and it deserves our support.
The compromise ensures compliance with the National Flood Insurance
Program through lender compliance provisions which enjoy widespread
support from the lending industry. Therefore, more people will be
paying into the National Flood Insurance Fund, more structures will
meet minimum building codes, and lenders will have expanded powers to
protect their collateral.
The compromise mandates a study of the controversial erosion hazard
zones. FEMA will have the authority to map erosion hazard zones in a
sample survey of communities around the country. FEMA will also conduct
a cost-benefit analysis of erosion hazard maps to determine if
nationwide mapping will save the National Flood Insurance Fund money.
FEMA will also study the economic effects of such mapping on the
affected communities. Many coastal communities rely on property taxes
from coastal residents to pay for their local firemen, policemen, and
teachers. The compromise recognizes the importance of giving Congress
the facts first so an informed decision can be made.
While I will vote for H.R. 3191, I still have some reservations
concerning the bill's purposes clause, the community rating system, and
mitigation provisions. However, these items should be addressed in
conference and not be used to block an otherwise good bill. I urge
Members to support the bill.
Mr. KENNEDY. Mr. Speaker, I yield 2 minutes to the gentleman from
Florida [Mr. Bacchus].
Mr. BACCHUS of Florida. Mr. Speaker, I thank the chairman for
yielding. I thank you especially for your kind words earlier today. Let
me assure the gentleman, as far as I am concerned, you are one of the
brightest and best Members of the Congress.
I want to say also I feel just as much about the gentleman from
Nebraska [Mr. Bereuter] and the gentleman from California [Mr.
McCandless]. They are two of the finest Members of the Congress as
well, and I am proud to be working with them here in this spirit of
compromise today.
Mr. Speaker, this is a piece of compromise legislation. As the
gentlemen here know, I have had some concerns about earlier
incarnations of this legislation. I voted against it in the committee.
The gentleman from Louisiana [Mr. Baker] and I introduced
counterlegislation and generated a great many cosponsors because of our
concern about some of the erosion zone mapping provisions of the
previous bill.
Thanks to the spirit of compromise and to the willingness of the
gentleman from Massachusetts [Mr. Kennedy] to compromise, those
problems have been eliminated. We have eliminated the erosion zone
mapping provisions that concern so many of us from so many coastal
States.
We have accepted the Senate compromise that I think is the right
answer to being able to protect the flood insurance fund, and also
protect millions of homeowners across America.
So I am supporting H.R. 3191. I encourage the cosponsors of the bill
that the gentleman from Louisiana [Mr. Baker] and I introduced, H.R.
4052, on a bipartisan basis, to support this piece of compromise
legislation.
I realize that some have concerns. To a certain extent I share some
of those concerns. I believe those concerns can and will be addressed
in conference. I believe they should not stand in the way of what
overall is a very fine piece of legislation.
So let me urge my colleagues to support H.R. 3191, support the
efforts of the gentleman from Massachusetts [Mr. Kennedy], the
gentleman from California [Mr. McCandless], the gentleman from Nebraska
[Mr. Bereuter], and others, to protect the flood insurance fund,
protect the taxpayers, and also protect the homeowners of Florida, the
coastal States, and all of America.
Mr. McCANDLESS. Mr. Speaker, I yield 3 minutes to the gentleman from
Florida [Mr. Goss].
Mr. GOSS. Mr. Speaker, I thank the gentleman from California for
yielding.
Mr. Speaker, I rise today because this is still a controversial
matter, despite great progress at compromise. I would rather work this
out on the floor of the House better before we sent it over to a
conference negotiation. It is for that reason I do not think we should
be considering this under the suspension procedure. I would like to
send this up to the Committee on Rules and get a modified amendment,
because as good a job as the gentleman from Massachusetts [Mr.
Kennedy], the gentleman from California [Mr. McCandless], the gentleman
from Nebraska [Mr. Bereuter], the gentleman from Florida [Mr. Bacchus],
and the gentleman from Louisiana [Mr. Baker] have done, there are still
some very serious problems with this legislation. They affect private
property rights, they affect litigation, they certainly are unfunded
mandates on communities, and the erosion concept has not been taken out
of here.
I am reminded of the last time the House addressed this issue. We had
overwhelming support for this reform of this program reauthorization, a
giant vote. I think it was more than 300 in favor of it. Then we ran
into a firestorm of protest across America because we had not done our
work well, and they shot it down in the Senate and saved our bacon. Let
us not do that again.
I rise today as a former mayor and county commissioner who has had
real life experience with the National Flood Insurance Program.
The flood insurance program is just that. It is an insurance program.
It is our first line of defense against massive expenditures of
emergency supplemental funds which we have been handing out at a great
rate lately. We need to do this and get on with this legislation.
But this legislation does not quite do it. If we could get it up in
the Committee on Rules and allow a few amendments, I think we could
improve it dramatically, where it would get the support virtually of
everybody and erase the firestorm we have seen in this country.

{time} 1320

There are real problems with the current financial condition of the
flood insurance program, especially the repetitive riverine losses. We
know about that. Year after year on the banks of the same river the
flood comes and people get flooded out, and we pay for them to build
back. That is crazy. That has to be fixed. This bill does not entirely
fix that problem.
The lack of compliance with the program in some areas of the country
is notorious. My State, Florida, is a major donor State. We are giving
away many, many dollars to the flood program, and we are not getting
those dollars returned to Florida. The problem with that is not that we
do not want to help people in the rest of the country, it is that they
are not paying premiums in the flood program. Why is that fair?
Everybody who is in a flood area should be paying in these premiums.
The facts do not justify that. This program does not fully resolve
that. I support reforming the program to make it more financially
sound, but as I said, I do not think this bill quite gets us there.
Despite the very good work done, and I want to emphasize that, the
gentleman from Florida [Mr. Bacchus] has done a good job on this, but
we did not quite get it over the goal line. It will affect Florida and
other coastal States dramatically.
I am concerned about amending the statement of purpose for this
program to include environmental language. The NFIP is an insurance
program. It is not an environmental program, and it has never been. I
went back to the original language. It is not in the original language
in the 1968 bill. Suddenly, we are creating something called ``an
environmental threshold,'' environmental standards and criteria that we
are not quite sure where it leaves our local communities or FEMA with
regard to opening up to litigation.
I believe it is broad and so broad it invites all kinds of people to
come in and file lawsuits on behalf of either an environmental point of
view or a private property point of view. The adoption of the community
rating system to reward localities to make an extra effort to reduce
risk is a great idea. Unfortunately, in this bill, in the bill the
language says, with some new and very ambiguous wording, that we will
now deal with areas and subdivisions, I do not know what those are, new
criteria for risk rating based on land use and erosion management.
These are very important concerns to people who have private property
or people who buy this insurance. Obviously, they are very important
concerns to any State that has an area or a subdivision in it.
I do not know what that language means. And apparently, neither does
anybody else.
I am worried about language that could be used to bring back the
concept of the erosion hazard zones. It is right in here. It is stated
in the bill that we are now going to deal with the erosion hazard
zones. That is going to put many people at risk.
I feel that the mitigation section, section 4 of H.R. 3191, is not
going to be effective. It is burdensome to individuals who are going to
be forced to go through a grant application program that is going to
take 90 days, it says.
The money raised by universal surcharges, $20 million to $30 million,
is not going to cover the anticipated $100 million cost a year. We have
a better proposal for that. We have a mitigation insurance program that
is based on risk. It is on a sliding scale, and it words in a more
timely manner so individuals can benefit from this and pay in according
to the risk.
I think that is the way insurance is supposed to work. I am not
opposed to the bill. I am opposed to the bill in its present form. I
want to get it off suspension and get it to a place where we can get it
into the Committee on Rules to have some amendments made in order with
the cooperation of the gentleman from Massachusetts [Mr. Kennedy] and
the others who have brought it this far.
Mr. McCANDLESS. Mr. Speaker, I yield myself such time as I may
consume.
I think the gentleman from Florida [Mr. Goss] makes a number of
interesting points. But the problem here, I think, is best summed up by
one of the comments of the gentleman from Nebraska [Mr. Bereuter]. This
bill does not go far enough. But at least it is a start in the right
direction. Many of us on the subcommittee and on the full committee
would have liked to have had certain parts of the bill that are not in
it, but there is a real demonstrated need for a revision in the flood
insurance program as demonstrated by recent catastrophes all over the
United States.
In this body, with 435 Members, it is not possible to write the
perfect bill that is going to satisfy everyone. I realize that and have
realized if for a number of years.
I signed off on this because I think it is the first best step in
taking hold of a major program that is federally-oriented and
addressing some of these major issues.
We talked in my remarks about the fact that we are going to study
these hazard areas. There is a mandate of 2 years on this study. They
have to come back to Congress and say, okay, erosion or no erosion
hazards.
And if they say erosion hazards, then we should get involved in risk-
based management, just as other insurance companies in other exposures
do.
Mr. Speaker, again, it is not a perfect program. But I think it is a
beginning point, and I would certainly ask my colleagues to support
this first step in what we need in the way of a major change updating
of our national association of activities dealing with the insurance
program and the flood insurance area.
Mr. Speaker, I yield back the balance of my time.
Mr. KENNEDY. Mr. Speaker, I yield myself such time as I may consume.
I think, in response to the issues that have been raised, the fact is
that this is a program that is crying out for reform. It is a program
that has, as a result of its inadequacies, cost the taxpayers of this
country billions of dollars.
We just, this past year, have had to provide over 5 billion dollars
worth of assistance to families and farmers in the Midwest that in fact
billions could have been saved if premiums had been paid up. Premiums
are not paid up because there is no enforcement by banks that are
supposed to make certain that when someone gets a bank loan for a
particular home mortgage that they are supposed to have flood insurance
at the same time they get the bank loan.
The banks do not do it. What happens is, only 10 percent of the
people across the country that live in places where their homes are
flooded actually get this insurance. It means when the flood occurs,
they only get probably $12,000 worth of government benefits, where they
could have their houses replaced. And the flood insurance program could
make a profit, if in fact it were run properly. It is not run properly.
It vitally needs reform.
The questions that have been raised by the gentleman from Florida
[Mr. Goss] can easily be answered. If we look at the notion that
somehow we are going to be ridiculously encouraging environmentalists,
the only language that is added says that we should encourage State and
local governments to protect natural and beneficial flood plain
functions that reduce flood-related losses. That is what the purpose of
the flood insurance program is. It adds nothing to the mission or
purposes beyond that which were already articulated in the purposes in
the enabling legislation.
Secondly, the notion that somehow the community rating system is
going to be a stick rather than a carrot, the only thing, if Members
read the bill, that we do is say, once FEMA has set the floor, which is
going to be true regardless, there are going to be communities that do
better. If they do better, their rates will be lowered. It is only a
carrot. There is no stick involved.
I think we should have a stick, but this legislation only provides
for a carrot.
Third, the notion that we should be making a flood mitigation
insurance program. I would be delighted to have an insurance program
if, in fact, we had some idea of how much it was going to cost. What we
are trying to do here is avoid the kind of savings and loan debacle,
avoid the kind of unfunded liability to end up on the backs of the
American taxpayer.
Think about this. What the U.S. Senate has said on this issue is that
we are going to provide people with a mitigation insurance program
which will cost no more than 50 bucks.
Now, there are thousands upon thousands of homes in Massachusetts,
and I dare say in the State of the gentleman from Florida [Mr. Goss]
that for 50 bucks will enable them to get $25,000 worth of benefits
from the Federal Government.
They can put their houses up on stilts. They can set it back. In
fact, they might even buy it out for them.
Now, I do not know how it is going to be in the State of Florida, but
I guarantee my colleagues, if we provide that as a guaranteed minimum
benefit to the people of Massachusetts, there are going to be thousands
of them that come forward and take advantage of the program. There is
no limitation whatsoever on what kinds of benefits we are going to be
bestowing, but what we do is say, nobody is going to pay more than 50
bucks.

{time} 1330

I will tell the Members, if we want to establish a brandnew problem
by passing this legislation with the amendment the gentleman from
Florida [Mr. Goss] has talked about, that is exactly what we are going
to accomplish. We tried to be reasonable in terms of our approach.
As the gentleman from California [Mr. McCandless] pointed out, we
cannot please everyone with this legislation, but if Members want to
see a program that gets up to speed, if they want to see a program that
begins to pay for itself, if they want to see thousands upon thousands
of Americans covered for flood insurance, legitimate flood insurance
purposes, if they want to see a program that targets the 3 percent of
the households in this country that are, year in and year out,
offenders of this program, that provide for 40 percent of how much we
have to pay out each year in benefits, then let us have a mitigation
program that has a cap benefit, that allows FEMA to target those
individuals that we are going to bail out, makes certain that they are
the ones that need the benefit, and they are the culprits that are
causing this insurance program to be broke each and every year.
I think this is a reasonable compromise. This is not a Democratic
bill, it is not a Republican bill. The gentleman from California [Mr.
McCandless] the ranking member, and I have agreed on it. The gentleman
from Nebraska [Mr. Bereuter] who has worked for it for years, has
agreed to it. The gentleman from Florida [Mr. Bacchus] and Mr. Baker,
who comes from an area that is very flood-sensitive, have all agreed to
this legislation.
I think this is a good compromise, and I strongly urge the Members of
this body to support this, Mr. Speaker, as we are about to vote.
Mr. GOSS. Mr. Speaker, may I ask how much time remains?
The SPEAKER pro tempore (Mr. Darden). The gentleman from
Massachusetts [Mr. Kennedy] has 5 minutes remaining.
Mr. GOSS. Mr. Speaker, will the gentleman yield?
Mr. KENNEDY. I yield to the gentleman from Florida.
Mr. GOSS. Mr. Speaker, I thank the gentleman for yielding to me.
Mr. Speaker, I would say to the distinguished gentleman from the
Commonwealth of Massachusetts [Mr. Kennedy] I have a copy which I think
is the operative copy we are dealing with here, and it says, ``The
Director shall carry out a community rating system program to evaluate
the measures adopted by areas and subdivisions thereof,'' et cetera, et
cetera, and it includes, under this mandatory language, ``to complement
adoption of more effective measures for flood plain and erosion
management.'' That is pretty broad. That is my concern, Mr. Speaker.
The gentleman has articulated and eloquently stated the goals that he
wants to accomplish, and so do I. We all do. I favor those goals. What
I am worried about is that kind of ambivalence.
Mr. KENNEDY. Mr. Speaker, I think, if the gentleman keeps reading, he
will read where it says they do it voluntarily.
Mr. GOSS. The problem I am concerned about, Mr. Speaker, if the
gentleman will continue to yield, is remember, we started this program
with voluntary participation by the lending institutions. Congress then
came back and put the teeth of this legislation in the lending
institutions.
Mr. KENNEDY. Reclaiming my time, Mr. Speaker, they do not do it. I
understand, but the fact of the matter is that the gentleman raises a
good point, which is that the lending institutions do not do it the way
they should. What we are trying to do is reform that issue in this
legislation.
Second, the gentleman raised a question of whether or not they were
carrots or sticks, with regard to communities that come under this
program. What we are trying to suggest to the gentleman is that there
are voluntary standards that, if the community needs, they will get a
reduced premium charged to the households that live in that community.
I do not think that can be deemed as a stick. That is simply a carrot
to try to get the localities to improve the rules and regulations on
building standards within their jurisdiction. That is all we are trying
to accomplish here.
Mr. GOSS. If the gentleman will yield further, my concern is that
that is a reasonable interpretation, but I fear an attorney might have
a different and equally reasonable interpretation that would have to be
resolved in the court.
Language like ``encouraging State and local governments to protect
natural and beneficial flood plain functions that reduce flood-related
losses'' invites litigation. Does that mean I am a farmer in Missouri
and I can no longer plant where the flood was last year, because it is
a natural flood plain, and there are environmental consequences? That
is very broad language, I submit.
Mr. KENNEDY. Reclaiming the balance of my time, Mr. Speaker, I think
the reality is that we are not talking about some broad mandate. What
we are talking about is some language that, in any piece of legislation
that we act on here in the Congress of the United States, there is
going to be enabling legislation.
I remember the legislation that created the Office of Economic
Opportunity. It talks about the elimination of poverty in America, and
I suppose the gentleman could make the case that somehow a lawyer could
bring suit against someone because we have not eliminated poverty.
This is enabling legislation. It talks about the purposes for which
the bill is established. To try to twist this into some kind of
legalese, or that somehow it is going to hand all the marbles over to
the environmentalists, is just a twist of wording to try to nail down
or try to knock down the passage of this legislation.
Mr. Speaker, I believe very strongly that we have a good compromise,
that we have a bipartisan compromise, that we have worked with Members
whose districts incorporate a great many flood zones. I happen to come
from a State that has a tremendous amount of coastline. I am very
sensitive to the needs of homeowners and the rights of cities and towns
that are on the coast.
Mr. Speaker, we do nothing to hurt those cities and towns. What we do
do is protect and encourage the provision of a new flood insurance
program that will look out for the taxpayer, that will at the same time
enable those individuals that are truly damaged to get the kind of
compensation that they need, and at the same time, over a period of
time, reform the overall coastal zone management of our country. That
is what we are trying to accomplish. That is what this bill does. I
urge its adoption.
Mr. GEPHARDT. Mr. Speaker, I rise today in support of the National
Flood Insurance Reform Act, H.R. 3191. I would like to commend
Representative Kennedy and his subcommittee for their efforts to bring
this much-needed legislation to the floor.
What we saw in the Midwest last summer was a total catastrophe. It is
estimated that the flood caused over $2 billion in damages in Missouri
alone. Areas of my district were underwater from July through
September. The Mississippi River and its tributaries devasted our
Nation's heartland.
Fortunately, in many cases, flood insurance saved families and
businesses from financial ruin. Paying regular premiums over the years
allowed them to rebuild after the flood waters receded. If they had
been flooded repeatedly, the insurance program would help them move out
of the floodplain and away from danger.
Although areas of the Midwest had a higher than average rate of flood
insurance purchases, in too many cases this past summer, people did not
have insurance. Some people were not aware of the program. Others may
have thought homeowners' insurance would cover their losses. Or perhaps
their community chose not to participate in the program. In any case,
those without flood insurance had to rely on their own savings or
Federal assistance to rebuild.
The National Flood Insurance Program provides flood insurance for
properties located in flood-prone areas where the community has
instituted floodplain management measures. The program is intended to
provide a more cost-effective alternative to costly Federal disaster
assistance by encouraging communities to take preventive measures that
reduce flood losses and by providing insurance to people who live in
the floodplain. For program participants this past summer, recovery was
eased by the insurance payment.
Arnold, MO, a town in my district, is an example of how the flood
insurance program should work. Arnold has made aggressive use of the
program. The community joined the program, worked to reduce risk by
turning flood-prone land into open space, and encouraged residents to
purchase flood insurance. If residents have been flooded repeatedly,
the city has made use of Federal programs to buy their property and
move them out of the floodplain.
Currently, federally regulated financial institutions must require
flood insurance before lending money for property in a floodplain.
However, non-federal financial institutions do not have that
requirement. This bill would require all lending institutions to obtain
flood insurance for property in a floodplain and would assess penalties
if loans are made for property in a floodplain without insurance. This
measure will increase compliance and reduce the Federal burden of the
recovery after a flood occurs. It will help victims of a flood and
reduce the Federal financial burden after a disaster.
In addition, if communities, like Arnold, take actions which reduce
the likelihood of flooding, premiums in that area will be reduced.
After the Midwest flooding, many communities chose to turn particularly
hard hit areas into fields or playgrounds. If another flood occurs,
there will be little if any property damage. In the meantime, children
and adults have an open park to relax and play.
I would urge anyone living in a floodplain to purchase flood
insurance. Then, if disaster strikes, they have some recourse for
recovery. Also, I would encourage communities to take advantage of
floodplain management programs that reduce the risk of flooding and
lower premiums. This bill will encourage both to occur. Once again, I
commend the subcommittee on its efforts and express my strong support
for this legislation.
Mr. HUGHES, Mr. Speaker, I rise in support of H.R. 3191 legislation
to reform the National Flood Insurance Program.
The National Flood Insurance Program was established by an act of
Congress in 1968 and substantially amended in 1973. The intent of the
program is to provide financial protection for property owners against
flood loss while, at the same time, working with communities to develop
floodplain management programs that will reduce or prevent future
losses. Premiums collected from policies issued under the program help
reduce the need for taxpayer funded disaster assistance payments.
I believe that, for the most part, the National Flood Insurance
Program has served its purpose well. However, as many in this body, in
New Jersey, and across the country have pointed out, there is
substantial room for improvement. We need to strengthen this program
and increase the stability of the National Flood Insurance Fund.
A while ago, Congressman Jim Saxton and I introduced legislation to
improve the National Flood Insurance Program, H.R. 4125, the Flood
Insurance Risk Management Act. We did this to expand the debate on
flood insurance reform and to offer our colleagues our view on where we
should be going with respect to this issue. We also did this to
highlight some of the concerns we had with H.R. 3191 as originally
drafted.
When I introduced my bill, I stated that I wanted to work with the
chairman and the gentleman from Florida to try to iron out the
differences in our bills and come to the floor with a consensus bill. I
want to compliment Mr. Kennedy and his staff for taking that offer
seriously and working with Mr. Bacchus, Mr. Saxton and me. The
legislation that is before us today is a much different and improved
version of H.R. 3191, and a great deal of the credit for those
improvements must go the distinguished chairman of the Consumer
Subcommittee, Mr. Kennedy and the distinguished gentleman from Florida,
Mr. Bacchus. This is a national flood insurance reform proposal that
will benefit both the Flood Insurance Program and the Policyholders.
H.R. 3191 will assure that those who purchase properties in special
flood hazard areas carry flood insurance in order to obtain a loan from
a federally backed lender. While the law does require this now, the
current enforcement provisions are not strong enough to ensure that
once a mortgage holder purchases insurance, that person maintains the
insurance as long as he or she owns the property. The result is that
only some 15-20 percent of those who should carry flood insurance
actually have it in force.
H.R. 3191 will provide lending institutions the authority to purchase
and maintain flood insurance for those whose properties are in special
flood hazard areas and are required to carry insurance under the law.
Furthermore, the bill requires that lenders who are providing loans for
properties in special flood hazard areas inform borrowers of their
requirement to carry flood insurance in advance of a closing.
Clearly, H.R. 3191 will do more than strengthen enforcement of
existing law. The act will help strengthen the stability of the
National Flood Insurance Program by giving communities incentives and
funding to reduce risks. For example, the bill establishes a community
rating system that will provide premium credits for communities that
pursue recommendations to eliminate flood-prone conditions.
H.R. 3191 will also help communities and individuals to reduce flood
risks by establishing a grant program to aid in mitigation planning and
to help cover the costs of mitigation. Some of the activities eligible
for grants under this program include floodproofing of individual
structures, beach nourishment, construction of sea walls and levees,
and the public purchase of properties to create buffer zones.
The bills that both Congressman Bacchus and I introduced contained
provisions for mitigation insurance to help defray the costs of
bringing older, flood prone structures into compliance with FEMA
guidelines--a procedure that would, in the long run, save money for the
flood insurance fund. However, chairman Kennedy had legitimate cost
concerns about such a program and opted not to include it in the
compromise legislation. To his credit, he worked with Mr. Bacchus and
me to tailor the grant program toward individuals as well as
communities. I certainly appreciate the chairman's efforts, but I would
still ask that the gentleman from Massachusetts and others who will be
conferees on this legislation, strongly consider the merits of the
mitigation insurance program that is included in the Senate version of
this legislation. I believe that, in the end, Mitigation Insurance will
be the best way to ensure that the structures that cost the fund the
most money are floodproofed.
And let me just take a second to talk about these structures, which
are known as repetitive loss structures. These are properties that have
suffered at least two loses of 25 percent or more over a 10 year
period. These structures represent the largest drain on the flood
insurance fund, accounting for some 40 percent of claims. Almost all of
these repetitive loss structures are subsidized buildings not designed
to FEMA's post-1974 construction standards which require elevation to
the 100 year flood level and other floodproofing measures.
I know that Chairman Kennedy is interested in removing subsidies for
these and other structures over a period of time--and I share that
view. One of the most frequently heard criticisms about the flood
insurance program is that it provides subsidies to landowners in risky
areas.
As many of my colleagues know, under the law, the Director is given
the authority to charge less than actuarial rates on certain structures
in order to make flood insurance available and affordable. I agree in
part with this philosophy because it is important that we have broad
participation in the program. However, it is time we begin to move
toward actuarial rates. I do not believe it was Congress' intent to
provide that subsidy in perpetuity.
I believe that we must make a serious effort to move the Flood
Insurance Program away from subsidies and do it is such a way so as not
to strain policyholders. In my bill was a provision which would require
that in order to offer policies at less than actuarial rates, the
Director must certify to the President and Congress, on a biannual
basis, that such rates are necessary in order to make insurance
available where necessary at reasonable rates so as to encourage
participation in the National Flood Insurance Program. This would have
forced FEMA, Congress and the administration to reassess the need for
subsidies every 2 years and changed the basic emphasis of the program.
I know that the chairman has been interested in pursuing such a
measured move away from subsidies, and commend him for his forward
thinking. I am also appreciative of his interest in my ideas on this
matter, and although we were not able to include such a provision in
this particular bill, I hope that we can work together to begin to take
balanced and realistic steps toward a more risk-based flood insurance
system.
Again, I would like to thank and compliment Chairman Kennedy and Mr.
Bacchus for their work, as well as Mr. McCandless and Mr. Bereuter
who--as I have said before--has worked hard over several years on this
issue. This bill is a good first step toward a more sound flood
insurance program. I urge my colleagues to support the measure.
Mr. SHAW. Mr. Speaker, I believe the House is making a serious
mistake today in considering a matter as important as reform of the
Federal Flood Insurance Program on the Suspension Calendar. I object to
the use of this expedited process, and I urge Members to defeat this
flawed legislation.
I recognize and appreciate that the present legislation is a vast
improvement over earlier versions, especially with regard to the
elimination of erosion zone mapping. In fact, FEMA estimated that had
erosion zone mapping become a reality, property owners in erosion zones
could have seen their premiums rise anywhere from $1,100 per year for a
condo to as much as $18,000 per year for a $250,000 single family home.
That would have absolutely devastated communities in my district. I am
gratified that voices from Florida and coastal areas around the country
were heard and erosion zone mapping was removed from this legislation.
Still, consideration under suspension of the roles prohibits Members
from offering amendments to other controversial provisions that remain
in this bill. I believe a number merit separate consideration and
amendment. Just one example is how this bill would modify the Flood
Insurance Program by adding the purpose of encouraging State and local
governments to protect natural and beneficial floodplain functions that
reduce flood-related losses. This may sound harmless. However, listing
this additional purpose is an open invitation for lawsuits blocking
needed projects as simple as a seawall. Similarly innocuous purposes in
HUD legislation have encouraged groups to sue, which supports the fact
that H.R. 3191 will open the door to further mass litigation.
I frankly doubt that more than a handful of Members have reviewed or
even seen the legislation that is before us for a vote, which was
rushed to the floor after an agreement was reached only last week. Many
Members will recall that the House approved similar flood insurance
reform legislation in the previous Congress. After cries of outrage
were heard from real Americans who understood what was at stake, the
Senate succeeded in effectively blocking passage of that legislation. I
fear the same fate may befall this bill unless changes are made.
Real reform of the Flood Insurance Program is needed, and I commend
the Members who have already made improvements to this bill. The
remaining problems, however, make it too controversial for
consideration on the Suspension Calendar. I encourage Members to vote
against this bill, so that the Rules Committee can send it back to the
floor with the opportunity for amendments that will make it a true
reform bill that all Members can support.
Mr. ROTH. Mr. Speaker, I urge my colleagues to vote for this
compromise version of H.R. 3191, the National Flood Insurance Reform
Act of 1994.
This bill is important to all States, especially the Great Lakes
States, with significant coastal and riverline development.
I am glad to see common sense has prevailed after all in providing
this alternative.
Before us today is a compromise version. I objected to provisions
originally that without appropriate study, preempted State and local
land use and planning laws.
Real estate markets, property tax rolls, and local economies would
have been destabilized for years while the mapping proceeded.
The compromise before us today, instead, would require an economic
impact study within 2 years to assess the costs and benefits of mapping
coastal and river erosion zones.
The State of Wisconsin supports enactment of this bill and is
particularly supportive of the provisions for the erosion areas study.
The reason is that flood insurance losses are driven up by major
eastern beachfront losses from erosion--not from flooding.
I agree with those who say we should examine carefully the present
practice of covering losses caused by beachfront erosion as well as
losses caused by flooding.
One key policy question is whether those in erosion-prone areas
should be required to buy erosion-loss insurance as well as flood-loss
insurance.
The study called for by this bill could provide information on which
this and other issues could be addressed by an informed Congress.
The bill before us today is basically designed to encourage lenders
and about 8.5 million eligible residential and commercial property
owners to buy and maintain flood insurance on buildings located in
flood-hazard areas.
Civil money penalties would provide the encouragement. Only about 20
percent of eligibles currently pay for flood insurance.
One major goal is to eliminate borrowing tax dollars from the
Treasury to cover flood-related losses. Such borrowing is estimated at
$100 million in fiscal year 1994 alone.
This bill would cut taxpayer costs of the National Flood Insurance
Program while improving and expanding its operations.
I urge my colleagues to vote for this bill.
Mr. CASTLE. Mr. Speaker, I rise in support of H.R. 3191, the National
Flood Insurance Reform Act. In particular, I want to express my
appreciation to Chairman Kennedy for addressing the concerns of many
Members regarding the erosion zone provisions in the original version
of the bill.
I thank Chairman Kennedy and Mr. McCandless for working with Mr.
Bacchus, Mr. Baker, and other Members from coastal areas like myself
who had serious concerns over section 407 of the bill. This section
would have essentially prohibited flood insurance for homes in the 30-
or 60-year erosion zones.
This provision would have negatively impacted coastal communities,
like those in Delaware, without a proven benefit to the Flood Insurance
Program. I am pleased that the bill before us today has been modified
to require an independent economic impact study to assess the costs and
benefits of mapping erosion zones.
H.R. 3191 will improve the National Flood Insurance Program and
strengthen its financial soundness. Enforcing the purchase of flood
insurance through banks and other mortgage lenders will cover more
homes and bring more homeowners into the program. This will help keep
the fund in the black, maintain premium rates at a fair level, and
ensure its ability to cover claims.
Residents in areas prone to flooding should be required to purchase
and maintain flood insurance. This legislation will enhance this goal.
While not perfect legislation, H.R. 3191 will improve the financial
stability of the Flood Insurance Program and provide fair treatment to
homeowners in coastal areas. I support passage of the bill.
Mr. KENNEDY. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Massachusetts [Mr. Kennedy] that the House suspend the
rules and pass the bill, H.R. 3191, as amended.
The question was taken.
Mr. GOSS. Mr. Speaker, I demand the yeas and nays.
The SPEAKER pro tempore. All those in favor of the yeas and nays will
stand and remain standing.
A sufficient number having arisen, pursuant to clause 5 of rule I,
and the Chair's prior announcement----
Mr. KENNEDY. Mr. Speaker, I would inquire of the Chair what the rule
is about a sufficient number of Members rising.
The SPEAKER pro tempore. The Chair advises that one-fifth of those
present constitutes a sufficient number.
Mr. KENNEDY. I would ask if the Chair would just count them up,
please, Mr. Speaker.
The SPEAKER pro tempore. The Chair already counted two Members
standing. There are less than 10 Members on the floor.
Mr. KENNEDY. Mr. Speaker, I withdraw my request.
The SPEAKER pro tempore. Pursuant to the provisions of clause 5 of
rule I and the Chair's prior announcement, further proceedings on this
motion will be postponed.

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