[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.

       (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:


                    ``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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