Congressional Record, Volume 150 Issue 86 (Monday, June 21, 2004)

[Congressional Record Volume 150, Number 86 (Monday, June 21, 2004)]
[House]
[Pages H4590-H4598]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

BUNNING-BEREUTER-BLUMENAUER FLOOD INSURANCE REFORM ACT OF 2004

Mr. GREEN of Wisconsin. Mr. Speaker, I move to suspend the rules and
pass the Senate bill (S. 2238) to amend the National Flood Insurance
Act of 1968 to reduce losses to properties for which repetitive flood
insurance claim payments have been made.
The Clerk read as follows:

S. 2238

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title; table of contents.
Sec. 2. Congressional findings.

TITLE I--AMENDMENTS TO FLOOD INSURANCE ACT OF 1968

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

TITLE II--MISCELLANEOUS PROVISIONS

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

SEC. 2. CONGRESSIONAL FINDINGS.

The Congress finds that--
(1) the national flood insurance program--
(A) identifies the flood risk;
(B) provides flood risk information to the public;
(C) encourages State and local governments to make
appropriate land use adjustments to constrict the development
of land

[[Page H4591]]

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

TITLE I--AMENDMENTS TO FLOOD INSURANCE ACT OF 1968

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

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

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

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

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

``(a) Authority.--To the extent amounts are made available
for use under this section, the Director may, subject to the
limitations of this section, provide financial assistance to
States and communities that decide to participate in the
pilot program established under this section for taking
actions with respect to severe repetitive loss properties (as
such term is defined in subsection (b)) to mitigate flood
damage to such properties and losses to the National Flood
Insurance Fund from such properties.
``(b) Severe Repetitive Loss Property.--For purposes of
this section, the term `severe repetitive loss property' has
the following meaning:
``(1) Single-family properties.--In the case of a property
consisting of 1 to 4 residences, such term means a property
that--
``(A) is covered under a contract for flood insurance made
available under this title; and
``(B) has incurred flood-related damage--
``(i) for which 4 or more separate claims payments have
been made under flood insurance coverage under this title,
with the amount of each such claim exceeding $5,000, and with
the cumulative amount of such claims payments exceeding
$20,000; or
``(ii) for which at least 2 separate claims payments have
been made under such coverage, with the cumulative amount of
such claims exceeding the value of the property.
``(2) Multifamily properties.--In the case of a property
consisting of 5 or more residences, such term shall have such
meaning as the Director shall by regulation provide.
``(c) Eligible Activities.--Amounts provided under this
section to a State or community may be used only for the
following activities:
``(1) Mitigation activities.--To carry out mitigation
activities that reduce flood damages to severe repetitive
loss properties, including elevation, relocation, demolition,
and floodproofing of structures, and minor physical localized
flood control projects, and the demolition and rebuilding of
properties to at least Base Flood Elevation or greater, if
required by any local ordinance.
``(2) Purchase.--To purchase severe repetitive loss
properties, subject to subsection (g).
``(d) Matching Requirement.--
``(1) In general.--Except as provided in paragraph (2), in
any fiscal year the Director may not provide assistance under
this section to a State or community in an amount exceeding 3
times the amount that the State or community certifies, as
the Director shall require, that the State or community will
contribute from non-Federal funds for carrying out the
eligible activities to be funded with such assistance
amounts.
``(2) Reduced community match.--With respect to any 1-year
period in which assistance is made available under this
section, the Director may adjust the contribution required
under paragraph (1) by any State, and for the communities
located in that State, to not less than 10 percent of the
cost of the activities for each severe repetitive loss
property for which grant amounts are provided if, for such
year--
``(A) the State has an approved State mitigation plan
meeting the requirements for hazard mitigation planning under
section 322 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5165) that specifies how
the State intends to reduce the number of severe repetitive
loss properties; and
``(B) the Director determines, after consultation with the
State, that the State has taken actions to reduce the number
of such properties.
``(3) Non-federal funds.--For purposes of this subsection,
the term `non-Federal funds' includes State or local agency
funds, in-kind contributions, any salary paid to staff to
carry out the eligible activities of the recipient, the value
of the time and services contributed by volunteers to carry
out such activities (at a rate determined by the Director),
and the value of any donated material or building and the
value of any lease on a building.
``(e) Notice of Mitigation Program.--
``(1) In general.--Upon selecting a State or community to
receive assistance under subsection (a) to carry out eligible
activities, the Director shall notify the owners of a severe
repetitive loss property, in plain language, within that
State or community--
``(A) that their property meets the definition of a severe
repetitive loss property under this section;
``(B) that they may receive an offer of assistance under
this section;
``(C) of the types of assistance potentially available
under this section;
``(D) of the implications of declining such offer of
assistance under this section; and
``(E) that there is a right to appeal under this section.
``(2) Identification of severe repetitive loss
properties.--The Director shall take such steps as are
necessary to identify severe repetitive loss properties, and
submit that information to the relevant States and
communities.
``(f) Standards for Mitigation Offers.--The program under
this section for providing assistance for eligible activities
for severe repetitive loss properties shall be subject to the
following limitations:
``(1) Priority.--In determining the properties for which to
provide assistance for eligible activities under subsection
(c), the Director shall provide assistance for properties in
the order that will result in the greatest amount of savings
to the National Flood Insurance Fund in the shortest period
of time, in a manner consistent with the allocation formula
under paragraph (5).
``(2) Offers.--The Director shall provide assistance in a
manner that permits States and communities to make offers to
owners of severe repetitive loss properties to take eligible
activities under subsection (c) as soon as practicable.
``(3) Consultation.--In determining for which eligible
activities under subsection (c) to provide assistance with
respect to a severe repetitive loss property, the relevant
States and communities shall consult, to the extent
practicable, with the owner of the property.
``(4) Deference to local mitigation decisions.--The
Director shall not, by rule, regulation, or order, establish
a priority for funding eligible activities under this section
that gives preference to one type or category of

[[Page H4592]]

eligible activity over any other type or category of eligible
activity.
``(5) Allocation.--
``(A) In general.--Subject to subparagraphs (B) and (C), of
the total amount made available for assistance under this
section in any fiscal year, the Director shall allocate
assistance to a State, and the communities located within
that State, based upon the percentage of the total number of
severe repetitive loss properties located within that State.
``(B) Redistribution.--Any funds allocated to a State, and
the communities within the State, under subparagraph (A) that
have not been obligated by the end of each fiscal year shall
be redistributed by the Director to other States and
communities to carry out eligible activities in accordance
with this section.
``(C) Exception.--Of the total amount made available for
assistance under this section in any fiscal year, 10 percent
shall be made available to communities that--
``(i) contain one or more severe repetitive loss
properties; and
``(ii) are located in States that receive little or no
assistance, as determined by the Director, under the
allocation formula under subparagraph (A).
``(6) Notice.--Upon making an offer to provide assistance
with respect to a property for any eligible activity under
subsection (c), the State or community shall notify each
holder of a recorded interest on the property of such offer
and activity.
``(g) Purchase Offers.--A State or community may take
action under subsection (c)(2) to purchase a severe
repetitive loss property only if the following requirements
are met:
``(1) Use of property.--The State or community enters into
an agreement with the Director that provides assurances that
the property purchased will be used in a manner that is
consistent with the requirements of section 404(b)(2)(B) of
the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5170c(b)(2)(B)) for properties
acquired, accepted, or from which a structure will be removed
pursuant to a project provided property acquisition and
relocation assistance under such section 404(b).
``(2) Offers.--The Director shall provide assistance in a
manner that permits States and communities to make offers to
owners of severe repetitive loss properties and of associated
land to engage in eligible activities as soon as possible.
``(3) Purchase price.--The amount of purchase offer is not
less than the greatest of--
``(A) the amount of the original purchase price of the
property, when purchased by the holder of the current policy
of flood insurance under this title;
``(B) the total amount owed, at the time the offer to
purchase is made, under any loan secured by a recorded
interest on the property; and
``(C) an amount equal to the fair market value of the
property immediately before the most recent flood event
affecting the property, or an amount equal to the current
fair market value of the property.
``(4) Comparable housing payment.--If a purchase offer made
under paragraph (2) is less than the cost of the homeowner-
occupant to purchase a comparable replacement dwelling
outside the flood hazard area in the same community, the
Director shall make available an additional relocation
payment to the homeowner-occupant to apply to the difference.
``(h) Increased Premiums in Cases of Refusal To Mitigate.--
``(1) In general.--In any case in which the owner of a
severe repetitive loss property refuses an offer to take
action under paragraph (1) or (2) of subsection (c) with
respect to such property, the Director shall--
``(A) notify each holder of a recorded interest on the
property of such refusal; and
``(B) notwithstanding subsections (a) through (c) of
section 1308, thereafter the chargeable premium rate with
respect to the property shall be the amount equal to 150
percent of the chargeable rate for the property at the time
that the offer was made, as adjusted by any other premium
adjustments otherwise applicable to the property and any
subsequent increases pursuant to paragraph (2) and subject to
the limitation under paragraph (3).
``(2) Increased premiums upon subsequent flood damage.--
Notwithstanding subsections (a) through (c) of section 1308,
if the owner of a severe repetitive loss property does not
accept an offer to take action under paragraph (1) or (2) of
subsection (c) with respect to such property and a claim
payment exceeding $1,500 is made under flood insurance
coverage under this title for damage to the property caused
by a flood event occurring after such offer is made,
thereafter the chargeable premium rate with respect to the
property shall be the amount equal to 150 percent of the
chargeable rate for the property at the time of such flood
event, as adjusted by any other premium adjustments otherwise
applicable to the property and any subsequent increases
pursuant to this paragraph and subject to the limitation
under paragraph (3).
``(3) Limitation on increased premiums.--In no case may the
chargeable premium rate for a severe repetitive loss property
be increased pursuant to this subsection to an amount
exceeding the applicable estimated risk premium rate for the
area (or subdivision thereof) under section 1307(a)(1).
``(4) Treatment of deductibles.--Any increase in chargeable
premium rates required under this subsection for a severe
repetitive loss property may be carried out, to the extent
appropriate, as determined by the Director, by adjusting any
deductible charged in connection with flood insurance
coverage under this title for the property.
``(5) Notice of continued offer.--Upon each renewal or
modification of any flood insurance coverage under this title
for a severe repetitive loss property, the Director shall
notify the owner that the offer made pursuant to subsection
(c) is still open.
``(6) Appeals.--
``(A) In general.--Any owner of a severe repetitive loss
property may appeal a determination of the Director to take
action under paragraph (1)(B) or (2) with respect to such
property, based only upon the following grounds:
``(i) As a result of such action, the owner of the property
will not be able to purchase a replacement primary residence
of comparable value and that is functionally equivalent.
``(ii) Based on independent information, such as contractor
estimates or appraisals, the property owner believes that the
price offered for purchasing the property is not an accurate
estimation of the value of the property, or the amount of
Federal funds offered for mitigation activities, when
combined with funds from non-Federal sources, will not cover
the actual cost of mitigation.
``(iii) As a result of such action, the preservation or
maintenance of any prehistoric or historic district, site,
building, structure, or object included in, or eligible for
inclusion in, the National Register of Historic Places will
be interfered with, impaired, or disrupted.
``(iv) The flooding that resulted in the flood insurance
claims described in subsection (b)(2) for the property
resulted from significant actions by a third party in
violation of Federal, State, or local law, ordinance, or
regulation.
``(v) In purchasing the property, the owner relied upon
flood insurance rate maps of the Federal Emergency Management
Agency that were current at the time and did not indicate
that the property was located in an area having special flood
hazards.
``(vi) The owner of the property, based on independent
information, such as contractor estimates or other
appraisals, demonstrates that an alternative eligible
activity under subsection (c) is at least as cost effective
as the initial offer of assistance.
``(B) Procedure.--An appeal under this paragraph of a
determination of the Director shall be made by filing, with
the Director, a request for an appeal within 90 days after
receiving notice of such determination. Upon receiving the
request, the Director shall select, from a list of
independent third parties compiled by the Director for such
purpose, a party to hear such appeal. Within 90 days after
filing of the request for the appeal, such third party shall
review the determination of the Director and shall set aside
such determination if the third party determines that the
grounds under subparagraph (A) exist. During the pendency of
an appeal under this paragraph, the Director shall stay the
applicability of the rates established pursuant to paragraph
(1)(B) or (2), as applicable.
``(C) Effect of final determination.--In an appeal under
this paragraph--
``(i) if a final determination is made in favor of the
property owner under subparagraph (A) exist, the third party
hearing such appeal shall require the Director to reduce the
chargeable risk premium rate for flood insurance coverage for
the property involved in the appeal from the amount required
under paragraph (1)(B) or (2) to the amount paid prior to the
offer to take action under paragraph (1) or (2) of subsection
(c); and
``(ii) if a final determination is made that the grounds
under subparagraph (A) do not exist, the Director shall
promptly increase the chargeable risk premium rate for such
property to the amount established pursuant to paragraph
(1)(B) or (2), as applicable, and shall collect from the
property owner the amount necessary to cover the stay of the
applicability of such increased rates during the pendency of
the appeal.
``(D) Costs.--If the third party hearing an appeal under
this paragraph is compensated for such service, the costs of
such compensation shall be borne--
``(i) by the owner of the property requesting the appeal,
if the final determination in the appeal is that the grounds
under subparagraph (A) do not exist; and
``(ii) by the National Flood Insurance Fund, if such final
determination is that the grounds under subparagraph (A) do
exist.
``(E) Report.--Not later than 6 months after the date of
the enactment of the Bunning-Bereuter-Blumenaur Flood
Insurance Reform Act of 2004, the Director shall submit a
report describing the rules, procedures, and administration
for appeals under this paragraph to--
``(i) the Committee on Banking, Housing, and Urban Affairs
of the Senate; and
``(ii) the Committee on Financial Services of the House of
Representatives.
``(i) Discretionary Actions in Cases of Fraudulent
Claims.--If the Director determines that a fraudulent claim
was made under flood insurance coverage under this title for
a severe repetitive loss property, the Director may--
``(1) cancel the policy and deny the provision to such
policyholder of any new flood insurance coverage under this
title for the property; or

[[Page H4593]]

``(2) refuse to renew the policy with such policyholder
upon expiration and deny the provision of any new flood
insurance coverage under this title to such policyholder for
the property.
``(j) Rules.--
``(1) In general.--The Director shall, by rule--
``(A) subject to subsection (f)(4), develop procedures for
the distribution of funds to States and communities to carry
out eligible activities under this section; and
``(B) ensure that the procedures developed under paragraph
(1)--
``(i) require the Director to notify States and communities
of the availability of funding under this section, and that
participation in the pilot program under this section is
optional;
``(ii) provide that the Director may assist States and
communities in identifying severe repetitive loss properties
within States or communities;
``(iii) allow each State and community to select properties
to be the subject of eligible activities, and the appropriate
eligible activity to be performed with respect to each severe
repetitive loss property; and
``(iv) require each State or community to submit a list of
severe repetitive loss properties to the Director that the
State or community would like to be the subject of eligible
activities under this section.
``(2) Consultation.--Not later than 90 days after the date
of enactment of this Act, the Director shall consult with
State and local officials in carrying out paragraph (1)(A),
and provide an opportunity for an oral presentation, on the
record, of data and arguments from such officials.
``(k) Funding.--
``(1) In general.--Pursuant to section 1310(a)(8), the
Director may use amounts from the National Flood Insurance
Fund to provide assistance under this section in each of
fiscal years 2005, 2006, 2007, 2008, and 2009, except that
the amount so used in each such fiscal year may not exceed
$40,000,000 and shall remain available until expended.
Notwithstanding any other provision of this title, amounts
made available pursuant to this subsection shall not be
subject to offsetting collections through premium rates for
flood insurance coverage under this title.
``(2) Administrative expenses.--Of the amounts made
available under this subsection, the Director may use up to 5
percent for expenses associated with the administration of
this section.
``(l) Termination.--The Director may not provide assistance
under this section to any State or community after September
30, 2009.''.
(b) Availability of National Flood Insurance Fund
Amounts.--Section 1310(a) of the National Flood Insurance Act
of 1968 (42 U.S.C. 4017(a)) is amended--
(1) in paragraph (7), by striking ``and'' at the end; and
(2) by striking paragraph (8) and inserting the following:
``(8) for financial assistance under section 1361A to
States and communities for taking actions under such section
with respect to severe repetitive loss properties, but only
to the extent provided in section 1361A(i); and''.

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

(a) Standard for Approval of Mitigation Plans.--Section
1366(e)(3) of the National Flood Insurance Act of 1968 (42
U.S.C. 4104c) is amended by adding at the end the following
new sentence: ``The Director may approve only mitigation
plans that give priority for funding to such properties, or
to such subsets of properties, as are in the best interest of
the National Flood Insurance Fund.''.
(b) Priority for Mitigation Assistance.--Section 1366(e) of
the National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is
amended by striking paragraph (4) and inserting the
following:
``(4) Priority for mitigation assistance.--In providing
grants under this subsection for mitigation activities, the
Director shall give first priority for funding to such
properties, or to such subsets of such properties as the
Director may establish, that the Director determines are in
the best interests of the National Flood Insurance Fund and
for which matching amounts under subsection (f) are
available.''.
(c) Coordination With States and Communities.--Section 1366
of the National Flood Insurance Act of 1968 (42 U.S.C. 4104c)
is amended by adding at the end the following:
``(m) Coordination With States and Communities.--The
Director shall, in consultation and coordination with States
and communities take such actions as are appropriate to
encourage and improve participation in the national flood
insurance program of owners of properties, including owners
of properties that are not located in areas having special
flood hazards (the 100-year floodplain), but are located
within flood prone areas.''.
(d) Funding.--Section 1367 of the National Flood Insurance
Act of 1968 (42 U.S.C. 4104d) is amended--
(1) in subsection (b), by striking paragraph (1) and
inserting the following:
``(1) in each fiscal year, amounts from the National Flood
Insurance Fund not exceeding $40,000,000, to remain available
until expended;'';
(2) by redesignating subsections (c) and (d) as subsections
(d) and (e), respectively; and
(3) by inserting after subsection (b) the following:
``(c) Administrative Expenses.--The Director may use not
more than 5 percent of amounts made available under
subsection (b) to cover salaries, expenses, and other
administrative costs incurred by the Director to make grants
and provide assistance under sections 1366 and 1323.''.
(e) Reduced Community Match.--Section 1366(g) of the
National Flood Insurance Act of 1968 (42 U.S.C. 4104c(g)), is
amended--
(2) by redesignating paragraph (2) as paragraph (3); and
(3) by inserting after paragraph (1) the following:
``(2) Reduced community match.--With respect to any 1-year
period in which assistance is made available under this
section, the Director may adjust the contribution required
under paragraph (1) by any State, and for the communities
located in that State, to not less than 10 percent of the
cost of the activities for each severe repetitive loss
property for which grant amounts are provided if, for such
year--
``(A) the State has an approved State mitigation plan
meeting the requirements for hazard mitigation planning under
section 322 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5165) that specifies how
the State intends to reduce the number of severe repetitive
loss properties; and
``(B) the Director determines, after consultation with the
State, that the State has taken actions to reduce the number
of such properties.''.
(f) National Flood Mitigation Fund.--Section 1366(b)(2) of
the National Flood Insurance Act of 1968 (42 U.S.C.
4104c(b)(2)), is amended by striking ``$1,500,000'' and
inserting ``7.5 percent of the available funds under this
section''.

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

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

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

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

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

(a) Compliance With Land Use and Control Measures.--Section
1304(b) of the National Flood Insurance Act of 1968 (42
U.S.C. 4011(b)) is amended--
(1) in the matter preceding paragraph (1)--
(A) by striking ``compliance'' and inserting ``implementing
measures that are consistent''; and
(B) by inserting ``by the community'' after
``established'';
(2) in paragraph (2), by striking ``have flood damage in
which the cost of repairs equals or exceeds 50 percent of the
value of the structure at the time of the flood event; and''
and inserting ``are substantially damaged structures;''
(3) in paragraph (3), by striking ``compliance with land
use and control measures.'' and inserting ``the
implementation of such measures; and''; and
(4) by inserting after paragraph (3) and before the last
undesignated paragraph the following:
``(4) properties for which an offer of mitigation
assistance is made under--
``(A) section 1366 (Flood Mitigation Assistance Program);
``(B) section 1368 (Repetitive Loss Priority Program and
Individual Priority Property Program);
``(C) the Hazard Mitigation Grant Program authorized under
section 404 of the Robert T. Stafford Disaster Assistance and
Emergency Relief Act (42 U.S.C. 5170c);
``(D) the Predisaster Hazard Mitigation Program under
section 203 of the Robert T. Stafford Disaster Assistance and
Emergency Relief Act (42 U.S.C. 5133); and

[[Page H4594]]

``(E) any programs authorized or for which funds are
appropriated to address any unmet needs or for which
supplemental funds are made available.''.
(b) Definitions.--Section 1370(a) of the National Flood
Insurance Act of 1968 (42 U.S.C. 4121(a)) is amended--
(1) by striking paragraph (7) and inserting the following:
``(7) the term `repetitive loss structure' means a
structure covered by a contract for flood insurance that--
``(A) has incurred flood-related damage on 2 occasions, in
which the cost of repair, on the average, equaled or exceeded
25 percent of the value of the structure at the time of each
such flood event; and
``(B) at the time of the second incidence of flood-related
damage, the contract for flood insurance contains increased
cost of compliance coverage.'';
(2) in paragraph (13), by striking ``and'' at the end;
(3) in paragraph (14), by striking the period and inserting
``; and''; and
(4) by adding at the end the following:
``(15) the term `substantially damaged structure' means a
structure covered by a contract for flood insurance that has
incurred damage for which the cost of repair exceeds an
amount specified in any regulation promulgated by the
Director, or by a community ordinance, whichever is lower.''.

SEC. 106. ACTUARIAL RATE PROPERTIES.

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

SEC. 107. GEOSPATIAL DIGITAL FLOOD HAZARD DATA.

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

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

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

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

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

TITLE II--MISCELLANEOUS PROVISIONS

SEC. 201. DEFINITIONS.

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

SEC. 202. SUPPLEMENTAL FORMS.

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

SEC. 203. ACKNOWLEDGEMENT FORM.

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

SEC. 204. FLOOD INSURANCE CLAIMS HANDBOOK.

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

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

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

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

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

[[Page H4595]]

SEC. 207. MINIMUM TRAINING AND EDUCATION REQUIREMENTS.

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

SEC. 208. GAO STUDY AND REPORT.

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

SEC. 209. PROSPECTIVE PAYMENT OF FLOOD INSURANCE PREMIUMS.

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

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

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

The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Wisconsin (Mr. Green) and the gentleman from Massachusetts (Mr. Frank)
each will control 20 minutes.
The Chair recognizes the gentleman from Wisconsin (Mr. Green).

general leave

Mr. GREEN of Wisconsin. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks and include extraneous material on S. 2238.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Wisconsin?
There was no objection.
Mr. GREEN of Wisconsin. Mr. Speaker, I yield myself such time as I
may consume.
Mr. Speaker, I rise in strong support of S. 2238, the Bunning-
Bereuter-Blumenauer Flood Insurance Reform Act, legislation to
reauthorize and reform the National Flood Insurance Program.
The legislation we are considering here today is a must-do bill.
Currently, this program is set to expire on June 30 of this year; and
without this program, the ability to close a loan and purchase a new
home in literally thousands of communities all across this country will
be placed in jeopardy.
The NFIP was established by Congress with the passage of the National
Insurance Act of 1968. The NFIP is a Federal program enabling property
owners in participating companies to purchase insurance as a protection
against flood losses in exchange for State and community floodplain
management regulations that reduce future flood damages.
Unfortunately, one of the authors of this important legislation, the
gentleman from Nebraska (Mr. Bereuter), is unable to be with us here
today. However, we would be remiss if we did not recognize his tireless
efforts on this bill. For over 14 years, the gentleman from Nebraska
(Mr. Bereuter) has worked hard to craft legislation that would reduce
the cost of this program to the American taxpayer. Today, repetitive-
loss properties cost the NFIP about $200 million each year. These
properties account for only 1 percent of the currently insured
properties across the country; yet they represent 25 to 30 percent of
all claims paid.
Under our current program, repetitive loss properties are eligible
for subsidized flood insurance at rates far below the actuarial rate
they should be paying. With the passage of this legislation, people
living in flood-prone areas will be provided assistance to reduce their
risk of flooding. If they choose not to reduce their risk of flooding,
they will be required to pay higher premiums.
In addition to reauthorizing the existing Flood Mitigation Assistance
program through 2008, the bill establishes a new pilot program aimed at
reducing the number of severe repetitive-loss properties and provides
$40 million to help reach that goal. It is important to note that this
fund will not be subject to a Federal appropriation. Instead, this
level of funding will come from money that is transferred from the
National Flood Insurance Fund, which is composed of policyholder
premiums.
S. 2238 is virtually identical to H.R. 253, the Flood Insurance
Reform Act of 2003, authored by the gentleman from Nebraska (Mr.
Bereuter) and passed by this House on November 20, 2003. I want to take
this opportunity to commend the gentleman from Nebraska (Mr. Bereuter)
for his hard work on this legislation and for his exemplary service to
this body over the years.
I urge my colleagues to support the passage of this bill.
Mr. Speaker, I reserve the balance of my time.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself such time as
I may consume.
Mr. Speaker, I concur in the description given by the gentleman from
Wisconsin. I am very proud of the work that on a bipartisan basis we
did here in this Congress. The House really generated this. The other
body went along with our initiative. The initiative really was due to
two Members of the House, one on each side of the aisle, the gentleman
from Nebraska, who has already been mentioned; and the gentleman from
Oregon (Mr. Blumenauer), who worked very well together and provided the
leadership that we on the committee were glad to support.
Mr. Speaker, as recognition of that and because of the press of other
business, I ask unanimous consent to turn over the management of the
remainder of this bill to the gentleman from Oregon (Mr. Blumenauer).
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Massachusetts?
There was no objection.
Mr. GREEN of Wisconsin. Mr. Speaker, I continue to reserve the
balance of my time.
Mr. BLUMENAUER. Mr. Speaker, I yield myself such time as I may
consume.
(Mr. BLUMENAUER asked and was given permission to revise and extend
his remarks.)
Mr. BLUMENAUER. Mr. Speaker, I appreciate very much the comments that
the gentleman from Wisconsin made and particularly highlighting the
long-standing contribution of our friend, the gentleman from Nebraska
(Mr. Bereuter) who I have been privileged to work with the last 6 years
on this bill, but I know he has been working on this issue and is a
recognized congressional expert, one of the gentleman's many areas of
expertise.
I think it is also important to note the cooperation with the
gentleman from Ohio (Chairman Oxley), the gentleman from Massachusetts
(Ranking Member Frank) who worked with us as we were maneuvering with
our friends in the Senate. I think this is a better bill for the
effort.
We have also had a great deal of back and forth from other Members
who are from States that have suffered from repetitive-flood loss; and
as a result of their efforts, and the work in the Senate, I think we
actually have a bill that provides better and broader protections than
when we had first begun this work.
Last but not least, I note on the floor the presence of Kyle Gilster,
who has done outstanding work staffing this on behalf of the gentleman
from Nebraska (Mr. Bereuter). I note that we also have Janine Benners
who has been doing this in my office.
Mr. Speaker, I would insert at this point in the Record the remainder
of my comments.

[[Page H4596]]

Thank you to Mr. Frank, Senator Bunning, Senator Shelby, and Senator
Sarbanes.
I also want to thank the staff of Representative Bereuter, Kyle
Gilster, and Representative Frank, Jeff Riley, for their work on this
issue.
The National Flood Insurance Program (NFIP) is crucial and good
example of working with local communities to reduce impact of
disasters. Benefits economy, environment, and individual property
values.
NFIP started in 1968--private insurance companies suffered high
losses and stopped offering coverage for flood damage. NFIP helps
homeowners deal with flood losses and gives communities tools to
prevent future flood damage. Program has already lowered flood damage
by 25 percent below the level that would have occurred without the
program.
Some problems with the program: in some cases, federal flood control
policy encourages floodplain development by financing the construction
and repair of levees and underwriting the risk of flooding.
FEMA was concerned about this problem during the Clinton and Bush
administrations. Mr. Bereuter and I worked with former FEMA
Administrator James Lee Witt to develop our proposal to fix NFIP
problems.
The Office of Management and Budget has pointed out that in too many
years the program has expenses greater than its revenue from insurance
premiums which prevents building long-term reserves to handle the costs
of flood insurance.
Twenty-five percent of the policyholders pay substantially subsidized
premiums, with the Federal Treasury and other policyholders paying the
difference.
Losers of the NFIP are people who live in areas that require flood
insurance, even though they do not have their property flood often, pay
dramatically high rates.
The program is currently self supporting from premium income.
However, in the 1980s federal taxpayers had to make up a shortfall of
$1.2 billion when the income from the low premiums was not enough to
cover the flood claims. The chances of this happening again are high.
Repetitively flooded properties are a significant strain on the NFIP.
FEMA reports that just 1 percent of the properties account for 25
percent of NFIP flood loss dollars. Many of these properties have
received more in flood insurance claims payments than the building's
value.
Subsidizing people to live in repetitively flooded areas does not
make sense.
It is bad for the federal taxpayer, bad for the environment, and bad
for the families that are continually placed in harm's way.
Property owners are trapped in a dangerous and expensive cycle. We do
flood victims no favors by rebuilding their homes in harm's way.
The legislation we are considering today will avoid many of the
injuries, deaths, and damages before they occur, and give property
owners the option of moving to a less hazardous area.
Our approach helps build disaster resistant communities and safe
homes by providing mitigation assistance to communities.
This bill has a number of benefits:
Most importantly, it will move people out of harm's way and
discourage newcomers from moving there. This bill will save lives by
moving people to higher ground.
Often overlooked, it will save the federal government millions of
dollars in avoided flood damages. FEMA reports that mitigation and
building standards already in place have resulted in over $1 billion
annually in reduced flood losses. Our bill will significantly increase
these savings by increasing funding for mitigation.
Savings to ratepayers in the National Flood Insurance Program.
Mitigating repetitively flooded properties will reduce the pressure to
raise flood insurance rates. The Association of State Floodplain
Managers estimates that avoiding just one 10 percent rate increase
could save the 4.4 million policyholders $175 million each year.
Finally, this bill will significantly benefit the environment. If
property-owners choose to relocate, the land will convert to open-
space. Non-structural approaches to flood control, such as voluntary
buyouts and restoration of natural floodplains, are often much more
effective in controlling floods than structural approaches. Natural
floodplains also prevent pollution problems from flooding.
As the bill went through the process in the House and Senate, we
worked with Members from coastal areas to make the reforms more
sensitive to the plight of their constituents.
I would like to highlight one change we were able to make in the
Increased Cost of Compliance (ICC) program. The bill not specifically
provides for use of the ICC program funds as local match monies. This
program, created in the 1994 Flood Insurance Reform Act, uses a flood
insurance premium surcharge to raise money for mitigation--but it
hasn't yet functioned well.
Freeing up these funds for use in mitigation of repetitive loss
properties will help the affected property owners by dramatically
reducing costs to them and will help all policy holders by stemming the
drain on the Flood Insurance Fund from repetitive claims.
I respectfully urge passage of the Bunning-Bereuter-Blumenauer Flood
Insurance Reform Act of 204. This is one of the best fiscal and
environmental opportunities for Congress this year.
We can't stop natural hazards from threatening our communities, but
we can try to minimize or stop them from becoming disasters, and that's
what this bill does.
Mr. NEY. Mr. Speaker, today, I rise in support of S. 2238, the
``Flood Insurance Reform Act of 2004.''
The Senate bill, in most respects, is identical to H.R. 253, which
passed the House on November 20, 2003. The Senate bill did make some
acceptable changes to the House-passed bill, such as a new title which
provides new consumer protections for flood insurance policyholders.
The Senate bill will extend the authorization of the NFIP through
September 30, 2008, and create a temporary pilot program to address
severe repetitive loss properties. The authorization of the NFIP is set
to expire on June 30, 2004. This legislation, S. 2238, represents a
continuation of this chamber's past efforts to reform the National
Flood Insurance Program.
Floods have been, and continue to be, one of the most destructive and
costly natural hazards to our nation. The National Flood Insurance
Program is a valuable tool in addressing the losses incurred throughout
this country due to floods. It assures that businesses and families
have access to affordable insurance that would not be available on the
open market.
The National Flood Insurance Program was established in 1968 with the
passage of the National Flood Insurance Act. Prior to that time,
insurance companies generally did not offer coverage for flood
disasters because of the high risks involved. Today, almost 20,000
communities participate in the national flood insurance program. More
than 90 insurance companies sell and service flood policies. There are
approximately $4.4 million policies covering a total of $620 billion.
In order to participate in the program, communities must agree to
abide by certain hazard mitigation provisions. These provisions include
adopting building codes that require new floodplain structures to be
protected against flooding or elevated above the 100-year floodplain.
The National Flood Insurance program is administered by the Federal
Emergency Management Agency (FEMA). It is worth noting that on November
25, 2002, President Bush signed into law the Homeland Security Act of
2002 which brought FEMA under the new Department of Homeland Security.
As many of you are aware, the NFIP reauthorization expired on
December 31, 2002. Unfortunately, Congress adjourned without extending
the flood insurance program. This situation was quickly remedied in the
108th Congress and on January 13, 2003, President Bush signed into law
a bill to reauthorize the program for one year, retroactively to
January 1, 2003. This one-year reauthorization gave us the time
necessary to determine how best to go about reforming the existing
program.
This is a good day for the National Flood Insurance Program and is a
good day for the American tax-payers. I applaud all members from both
chambers for reaching an agreement.
I urge my colleagues to support this initiative.
Mr. BEREUTER. Mr. Speaker, this Member rises today to express his
support for S. 2238, a bill to reauthorize the National Flood Insurance
Program (NFIP). This legislation, the Bunning-Bereuter-Blumenauer Flood
Insurance Reform Act of 2004, passed the Senate by unanimous consent on
June 15, 2004. The Senate bill will extend the authorization of the
NFIP through September 30, 2008, and create a temporary pilot program
to address severe repetitive loss properties. The authorization of the
NFIP is set to expire on June 30, 2004. This legislation, S. 2238,
represents a continuation of this Member's past efforts to reform the
NFIP.
This Senate bill, in most respects, is identical to H.R. 253, which
passed the House on November 20, 2003. This Member introduced H.R. 253
on January 8, 2003, along with my distinguished colleague from Oregon
(Mr. Blumenauer). The Senate bill did make some acceptable changes to
the House-passed bill, such as a new title which provides new consumer
protections for flood insurance policyholders. However, this Member
continues to adamantly oppose one change by the Senate. The Senate bill
allows a policyholder to make an appeal, based on independent
information, such as contractor estimates or other appraisals. This
Member will discuss his strong opposition to this provision at the
appropriate time in this statement.
When it comes to expressions of appreciation, this Member first would
like to thank the

[[Page H4597]]

distinguished gentleman from Oregon (Mr. Blumenauer) who was both an
original cosponsor of H.R. 253 and a tireless advocate for reform of
the NFIP. The distinguished gentleman from Oregon and this Member
introduced similar versions of this legislation, in both the 106th and
107th Congresses.
This Member would also like to thank both the distinguished gentleman
from Ohio (Mr. Oxley), the Chairman of the House Financial Services
Committee, and the distinguished gentleman from Massachusetts (Mr.
Frank) for their efforts in bringing this Senate measure to the House
floor. This Member must also thank the distinguished junior senator
from Kentucky (Mr. Bunning), the chairman of the Senate Banking,
Housing and Urban Affairs Subcommittee on Economic Policy, for
introducing S. 2238. This Member also appreciates the contributions of
the following Senators who are very supportive of this legislation: the
distinguished senior senator from Alabama (Mr. Shelby), the Chairman of
the Senate Banking, Housing and Urban Affairs Committee; the
distinguished senior senator from Maryland (Mr. Sarbanes), and the
distinguished senior senator from Nebraska, my friend, (Mr. Hagel)
among others.
This Member would also like to thank the distinguished gentleman from
Louisiana (Mr. Baker) for being a conscientious legislator who offered
a number of provisions which ultimately were included in H.R. 253 and
which in turn have subsequently been incorporated into S. 2238. The
incorporated suggestions by the distinguished gentleman from Louisiana
have made the final product a better bill.
Finally, this Member would also like to thank all of the House and
Senate Committee staff who have worked on this legislation.
Specifically, this Member would like to thank Kyle Gilster, a Nebraskan
formerly on my congressional staff who is now a key member of the staff
of the House Financial Services, for his efforts with H.R. 253. In
addition, this Member also appreciates the very effective work of
Janine Benner, who is a legislative staff member for the distinguished
gentleman from Oregon (Mr. Blumenauer).
Mr. Speaker, today, this Member would like to organize his remaining
comments under the following three sections:
1. background on repetitive loss properties;
2. contents of S. 2238; and
3. the changes the Senate made to H.R. 253.

1. background on repetitive loss properties

This Member has been actively proposing specific reform provisions
for the NFIP for over 14 years. His work on this issue soon became a
bipartisan effort with the distinguished gentleman from Massachusetts
(Mr. Joseph Kennedy) who is no longer serving in the House. This
legislation, S. 2238, is primarily drawn from H.R. 253, which
represents a culmination of my legislative efforts to reduce the
extraordinary loss of repetitive loss properties.
Currently, repetitive loss properties cost the NFIP about $200
million annually. These properties while comprising approximately one
percent of the currently insured properties, are expected to account
for 25 to 30 percent of claims paid. For example, one home, valued at
$114,480, has received $806,591 in flood insurance claims over an 18-
year period.
Today, the vast majority of repetitive-loss properties are eligible
for subsidized flood insurance at rates far below the actuarial risk
rate they should be paying. This bill, S. 2238, would at last move the
NFIP towards a more free-market insurance model by requiring people
living in flood prone areas to reduce their risk of flooding or pay
higher premiums.

2. contents of S. 2238

This legislation, S. 2238, authorizes funds for both the existing
Flood Mitigation Assistance (FMA) program and a new pilot program. This
approach is identical to the one that was used in H.R. 253.
FMA Program. This bill, S. 2238, uses FEMA's existing FMA program to
mitigate repetitive loss properties. This bill authorizes up to an
additional $40 million a year to be transferred from the National Flood
Insurance Fund into the FMA fund through FY2008.
Pilot Program. Under S. 2238, $40 million a year is authorized to be
transferred from the National Flood Insurance Fund into the pilot
program. These funds are required to be used to reduce the number of
severe repetitive loss properties. Under this legislation, a severe
repetitive loss property must at least meet one of the following two
definitions:
(i) for which 4 or more separate claims have been made, with the
amount of each claim exceeding $5,000, and with the cumulative amount
exceeding $20,000; or
(ii) for which at least two claims have been made which exceed the
value of the property.
Using this definition, the Federal Emergency Management Agency (FEMA)
has estimated that approximately 6,200 properties nationwide would
qualify as a severe repetitive loss property.
This trial pilot program, which would expire on September 30, 2009,
addresses these properties in a simple, straightforward manner. The
owner of a severe repetitive loss property will be charged a rate
closer to the actuarial, risk-based rates for their national flood
insurance policy if two conditions prevail.
The first condition is that it is by definition a severe repetitive
loss property. The second condition is that the owner of the real
property must have refused a mitigation measure from a state or
locality, such as the elevation of the structure or a buy-out of the
property. (It is important to note that this bill preserves state and
local decision-making.)
If both of these conditions have been met, rates for severe
repetitive loss properties will be increased by 50 percent. Properties
will be subject to additional 50 percent increases for each future
flood insurance claim exceeding $1500. However, flood insurance rates
cannot be increased to a rate higher than the actuarial level.

3. Senate changes to h.r. 253

As mentioned earlier, some constructive changes were made in S. 2238.
However, this Member continues to strongly oppose one change made by
the Senate. The Senate bill adds a new source of appeal which allows a
policyholder, based on independent information, such as contractor
estimates or other appraisals, to demonstrate either of the following:
the purchase price under a buyout is not an accurate estimate of the
property; or that there is an alternative eligible mitigation activity.
This Member strongly feels that this is a bad provision.
This provision allows a policy holder to appeal an increase in their
flood insurance rates if they find one appraiser to make a
determination which is favorable to them. This ``independent
appraiser'' provision is a mile-wide opening--anybody can shop around
and find an appraiser which will give them grounds to appeal. This
provision will result in an unnecessary number of appeals which will
inevitably bog down the appeals process. This Member directs FEMA to
pass regulations that will reduce the very wide breadth of this
provision--thus, limiting the abuse of this appeal method.
This Member had conveyed to the Senate his opposition to this
provision. Nevertheless, they still did not strike this new appeals
criteria. Unfortunately, we have run out of time in this legislation to
make a change since the authorization of the NFIP expires on June 30,
2004. This Member urges his colleagues in the House to pass a separate
bill in the immediate future to strike this new appeals criteria.
The Senate bill, S. 2238, does make certain changes relative to the
House bill which are very constructive. For example, a new title was
added which creates additional consumer protections for policyholders.
This new title was added at the suggestion of the two distinguished
Senators from Maryland (Mr. Sarbanes and Ms. Mikulski). The impetus for
this new title was the problems that flood insurance policy holders in
Maryland experienced in the aftermath of the most recent hurricane.
This Member is in full support of this change.
This new title requires the Director to develop consumer related
disclosure/information forms and a flood insurance claims handbook for
policyholders. The Director must promulgate regulations outlining an
appeals process for policyholders with respect to claims, proofs of
loss, and loss estimates related to flood insurance policies. The
Director must also establish minimum training and education
requirements, in cooperation with the insurance industry, for all
insurance agents who sell flood insurance.
Among other changes, the Senate bill modifies the Federal/state cost
share for mitigation projects under the existing FMA program and the
pilot program. The changes in the Senate bill were made at the request
of the FEMA so that it would be easier to implement the pilot program
and the FMA program nationwide.
This Member believes that it is important that one final public
policy point be made. The bill, S. 2238, would reduce the amount of
regional cost-shifting on flood insurance which is occurring among
states and within states. The policyholders in non-repetitive loss
areas of the country (such as in Nebraska) by their higher than
appropriate premiums are subsidizing the policyholders in repetitive
loss areas of the country. Flood insurance policyholders in communities
along the Platte River across Nebraska are paying significantly more in
flood insurance premiums than the risk warrants. For example, property
owners in North Platte have paid $1.2 million in flood insurance
premiums over the last 25 years, while only $26,000 has been paid out
in claims over this time period. The Senate bill, S. 2238, would give
FEMA the funds and the tools to mitigate repetitive loss properties
which will result in more affordable premiums in the future for
policyholders from non-repetitive loss areas of the country, such as in
Nebraska.
Mr. Speaker, in conclusion, Congress is finally acting to stop the
very expensive treading through the water of repetitive loss after
repetitive loss. A very impressive and diverse group of taxpayer,
financial, and environmental associations are all in strong support of

[[Page H4598]]

S. 2238. This Member would encourage the House to pass, S. 2238, the
Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004, as it
is very necessary reform legislation that is long overdue.
Mr. OSBORNE. Mr. Speaker, I rise in support of S. 2238, the Bunning-
Bereuter-Blumenauer Flood Insurance Reform Act of 2004.
S. 2238 was originally H.R. 253 which was authored by my dear
colleague and fellow Nebraskan, Mr. Bereuter of Nebraska, and
cosponsored by Mr. Blumenauer of Oregon. Both Members have been strong
advocates for reforming the National Flood Insurance program,
administered by the Federal Emergency Management Agency, since the
106th Congress. Mr. Bereuter has been a champion of this legislation
for the last 14 years.
The legislation will extend the authorization of the National Flood
Insurance Program (NFIP) through September 30, 2008, and create a
temporary pilot program to address severe repetitive loss properties
(SRLPs).
The authorization of the NFIP is set to expire on June 30, 2004.
I support the temporary pilot program included in this important
legislation because it will address the problem of severe repetitive
loss properties for which many communities in my district are paying
increased premiums.
I have numerous communities in my district paying substantial
premiums on properties that have not been affected by flooding since
the beginning of the program.
One example is North Platte, Nebraska. The community sits between the
North and South Platte Rivers. The North and South Platte Rivers merge
east of North Platte. While the National Flood Insurance Program has
been in place since 1968, North Platte has paid over $1 million in
premiums each year, but has not received more than $26 thousand in
flood insurance claims during that time. The community has been working
diligently with FEMA and the Nebraska Department of Natural Resources
to reduce the cost of the National Flood Insurance premiums, but
premiums continue to remain high.

That is why I support S. 2238.
S. 2238 authorizes up to $40 million a year to be transferred from
the National Flood Insurance Fund for mitigation assistance to reduce
the problem of SRLPs. The money in the National Flood Insurance Fund
comes from flood insurance premiums from policyholders and would not
need an appropriation.
This pilot program, which would expire on September 30, 2009,
addresses these properties in a simple, straightforward manner; the
owner of a SRLP will be charged a rate closer to the actuarial, risk-
based rates for their national flood insurance policy if two conditions
prevail.
The first condition is that it is indeed by definition a SRLP. Under
this legislation, a severe repetitive loss property must at least meet
one of the following two definitions: Four or more separate claims have
been made, with the amount of each claim exceeding $5,000, and with the
cumulative amount exceeding $20,000; at least two claims have been made
which exceed the value of the property.
The second condition which would cause the applicability of closer to
actuarial rates to be applied is that the owner of the real property
must have refused a mitigation measure from a state or locality, such
as the elevation of the structure or a buy-out of the property. If both
of these conditions have been met, rates for SRLPs will be increased by
50 percent.
Properties will be subject to additional 50 percent increases for
each subsequent flood event where claims payments exceed $1,500.
However, flood insurance rates applied cannot be higher than the
actuarial based NFIP rates.
I would again like to thank Mr. Bereuter and Mr. Blumenauer for their
tireless determination to improve the National Flood Insurance Program
to assist those communities that have not had repetitive losses.
Mr. GREEN of Texas. Mr. Speaker, the National Flood Insurance Program
is literally a lifeline to thousands of my constituents, restoring
their homes and properties after devastating floods that have become
too common for Houston and Harris County, Texas, residents. I support
S. 2238 on the suspension calendar today.
There are over 172,000 homes and businesses with National Flood
Insurance Program (NFIP) policies in Houston and Harris County, over 37
percent of the 461,000 statewide in Texas. These federally backed NFIP
policies are vital to our area because private insurers would not make
flood insurance available at any kind of affordable price. H.R. 2238
reassures residents, realtors, insurers, and lending institutions that
this Federal backing of the NFIP will be extended by 4 more years until
September 2008.
The reform included in this legislation will mean major changes for
the Houston area, which has many homes with repeat flood insurance
claims. It is important to treat NFIP policy holders fairly because
they may now receive FEMA buyout and mitigation offers once they have 4
separate claims of $5,000 each (or 2 claims exceeding the value of the
home), and if they refuse, their premiums will increase by 50 percent,
and an addition 50 percent after each following claim of $1,500, until
the premium equals the ``market'' premium.
These reform provisions have a noble goal of reducing flood premiums
for most policy holders and assisting residents who repeatedly flood.
But asking someone to leave their home through a government buyout
offer can be a traumatic process, especially if the buyout offer does
not allow for a smooth relocation of the flood victim.
After Tropical Storm Allison in Harris County in 2001, we had ``fair
market'' buyout FEMA offers so low that people would have been unable
to purchase another home outside of the floodplain. So after Allison,
we had to scramble to find additional Federal, State, and local sources
of funding to assist these people, since FEMA's policy would not allow
for purchase offers greater than ``fair market value.'' That kind of
uncertainty for a homeowner facing 50 percent higher insurance premiums
for refusing a government buyout is just not fair.
In response to these experiences, I authored a provision included in
this bill to require FEMA to offer additional funds if ``a purchase
offer made under [this law] is less than the cost of the homeowner-
occupant to purchase a comparable replacement dwelling outside the
flood hazard area in the same community, the Director [of FEMA] shall
make available an additional relocation payment to the homeowner-
occupant to apply to the difference.'' [S. 2238 Section 102(g)(4)].
I wish to extend my thanks to my colleagues who assisted me in this
effort, Chairman Oxley, Ranking Member Frank, and Congressman Bereuter.
Their willingness to listen to the concerns of my constituents over
this legislation is much appreciated. Because of the efforts of
Chairman Oxley, Ranking Member Frank, and Congressman Bereuter to
ensure that homeowners receive a fair price for their homes, I support
this legislation and look forward to working with them on a fair and
efficient implementation of a reformed, National Flood Insurance
Program.
Mr. BLUMENAUER. Mr. Speaker, I yield back the balance of my time.
Mr. GREEN of Wisconsin. Mr. Speaker, I have no further requests for
time, and I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Wisconsin (Mr. Green) that the House suspend the rules
and pass the Senate bill, S. 2238.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the Senate bill was passed.
A motion to reconsider was laid on the table.

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