[House Report 108-266]
[From the U.S. Government Publishing Office]



108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    108-266
======================================================================
 
    TWO FLOODS AND YOU ARE OUT OF THE TAXPAYERS' POCKET ACT OF 2003

                                _______
                                

 September 5, 2003.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 253]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 253) to amend the National Flood Insurance Act of 
1968 to reduce losses to properties for which repetitive flood 
insurance claim payments have been made, having considered the 
same, report favorably thereon with an amendment and recommend 
that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................    10
Background and Need for Legislation..............................    10
Hearings.........................................................    11
Committee Consideration..........................................    11
Committee Votes..................................................    11
Committee Oversight Findings.....................................    12
Performance Goals and Objectives.................................    12
New Budget Authority, Entitlement Authority, and Tax Expenditures    12
Committee Cost Estimate..........................................    12
Congressional Budget Office Cost Estimate........................    12
Federal Mandates Statement.......................................    15
Advisory Committee Statement.....................................    15
Constitutional Authority Statement...............................    15
Applicability to Legislative Branch..............................    15
Section-by-Section Analysis......................................    15
Changes in Existing Law Made by the Bill, as Reported............    18

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Two Floods and You Are Out of the 
Taxpayers' Pocket Act of 2003''.

SEC. 2. CONGRESSIONAL FINDINGS.

  The Congress finds that--
          (1) the national flood insurance program (A) identifies the 
        flood risk, (B) provides flood risk information to the public, 
        (C) encourages State and local governments to make appropriate 
        land use adjustments to constrict the development of land which 
        is exposed to flood damage and minimize damage caused by flood 
        losses, and (D) makes flood insurance available on a nationwide 
        basis that would otherwise not be available, to accelerate 
        recovery from floods, mitigate future losses, save lives, and 
        reduce the personal and national costs of flood disasters;
          (2) the national flood insurance program insures 
        approximately 4,400,000 policyholders;
          (3) approximately 48,000 properties currently insured under 
        the program have experienced, within a 10-year period, two 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 two or three losses that cumulatively 
        exceed building value or four 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 one 
        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; and
          (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.

SEC. 3. EXTENSION OF PROGRAM AND CONSOLIDATION OF AUTHORIZATIONS.

  The National Flood Insurance Act of 1968 is amended as follows:
          (1) Borrowing authority.--In the first sentence of section 
        1309(a) (42 U.S.C. 4016(a)), by striking ``through December'' 
        and all that follows through ``, and'' and inserting the 
        following: ``through the date specified in section 1319, and''.
          (2) Authority for contracts.--In section 1319 (42 U.S.C. 
        4026), by striking ``after'' and all that follows and inserting 
        ``after September 30, 2008.''.
          (3) Emergency implementation.--In section 1336(a) (42 U.S.C. 
        4056(a)), 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''.
          (4) Authorization of appropriations for studies.--In section 
        1376(c) (42 U.S.C. 4127(c)), by striking ``through'' and all 
        that follows and inserting the following: ``through the date 
        specified in section 1319, for studies under this title.''.

SEC. 4. 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 new 
section:
  ``pilot program for mitigation of severe repetitive loss properties
  ``Sec. 1362. (a) Authority.--To the extent amounts are made available 
for use under this section, the Director may, subject to the 
limitations of this section, provide financial assistance to States and 
communities for taking actions with respect to severe repetitive loss 
properties (as such term is defined in subsection (b)) to mitigate 
flood damage to such properties and losses to the National Flood 
Insurance Fund from such properties.
  ``(b) Severe Repetitive Loss Property.--For purposes of this section, 
the term `severe repetitive loss property' has the following meaning:
          ``(1) Single-family properties.--In the case of a property 
        consisting of one to four 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 four or more separate claims 
                        payments have been made under flood insurance 
                        coverage under this title before the date of 
                        the enactment of the Two Floods and You Are Out 
                        of the Taxpayers' Pocket Act of 2003, with the 
                        amount of each such claim exceeding $5,000, and 
                        with the cumulative amount of such claims 
                        payments exceeding $20,000;
                          ``(ii) for which four or more separate claims 
                        payments have been made under flood insurance 
                        coverage under this title after the date of the 
                        enactment of the Two Floods and You Are Out of 
                        the Taxpayers' Pocket Act of 2003, with the 
                        amount of each such claim exceeding $3,000, and 
                        with the cumulative amount of such claims 
                        payments exceeding $15,000; or
                          ``(iii) for which at least two 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 five 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 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.
          ``(2) Purchase.--To purchase severe repetitive loss 
        properties, subject to subsection (f).
  ``(d) Matching Requirement.--
          ``(1) In general.--Except as provided in paragraph (2), 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) Waiver.--
                  ``(A) Authority.--Subject to subparagraph (B), the 
                Director may waive the limitation under paragraph (1) 
                for any State, and for the communities located in that 
                State, with respect to a year, if, for such year--
                          ``(i) 5 percent or more of the total number 
                        of severe repetitive loss properties in the 
                        United States are located in such State; and
                          ``(ii) the State submits a plan to the 
                        Director specifying how the State intends to 
                        reduce the number of severe repetitive loss 
                        properties and the Director determines, after 
                        consultation with State and technical experts, 
                        that the State has taken actions to reduce the 
                        number of such properties.
                  ``(B) Limitation.--In each waiver under subparagraph 
                (A), the Director may waive the limitation under 
                paragraph (1) only to the extent that the State or 
                community involved is required to contribute, for each 
                severe repetitive loss property for which grant amounts 
                are provided, not less than 10 percent of the cost of 
                the activities for such properties that are to be 
                funded with grant amounts.
          ``(3) Non-federal funds.--For purposes of this subsection, 
        the term `non-Federal funds' includes State or local agency 
        funds, in-kind contributions, any salary paid to staff to carry 
        out the eligible activities of the recipient, the value of the 
        time and services contributed by volunteers to carry out such 
        activities (at a rate determined by the Director), and the 
        value of any donated material or building and the value of any 
        lease on a building.
  ``(e) Standards for Mitigation Offers.--The program under this 
section for providing assistance for eligible activities for severe 
repetitive loss properties shall be subject to the following 
limitations:
          ``(1) Priority.--In determining the properties for which to 
        provide assistance for eligible activities under subsection 
        (c), the Director shall provide assistance for properties in 
        the order that will result in the greatest amount of savings to 
        the National Flood Insurance Fund in the shortest period of 
        time.
          ``(2) Offers.--The Director shall provide assistance in a 
        manner that permits States and communities to make offers to 
        owners of severe repetitive loss properties to take eligible 
        activities under subsection (c) as soon as is practicable.
          ``(3) Notice.--Upon making an offer to provide assistance 
        with respect to a property for any eligible activity under 
        subsection (c), the State or community shall notify each holder 
        of a recorded interest on the property of such offer and 
        activity.
  ``(f) Purchase Offers.--A State or community may take action under 
subsection (c)(2) to purchase a severe repetitive loss property only if 
the following requirements are met:
          ``(1) Use of property.--The State or community enters into an 
        agreement with the Director that provides assurances that the 
        property purchased will be used in a manner that is consistent 
        with the requirements of clauses (i) and (ii) 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) 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.
  ``(g) Increase to Actuarial Rates 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) increase the chargeable risk premium rate for 
                flood insurance coverage under this title for the 
                property to an amount equal to the applicable estimated 
                risk premium rate for such area (or subdivision 
                thereof) under section 1307(a)(1) and apply appropriate 
                loss deductibles.
          ``(2) 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) 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) 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.
                          ``(iii) 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.
                          ``(iv) In purchasing the property, the owner 
                        relied upon flood insurance rate maps of the 
                        Federal Emergency Management Agency that were 
                        current at the time and did not indicate that 
                        the property was located in an area having 
                        special flood hazards.
                  ``(B) Procedure.--An appeal under this paragraph of a 
                determination of the Director shall be made by filing, 
                with the Director, a request for an appeal within 90 
                days after receiving notice of such determination. Upon 
                receiving the request, the Director shall select, from 
                a list of independent third parties compiled by the 
                Director for such purpose, a party to hear such appeal. 
                Within 90 days after filing of the request for the 
                appeal, such third party shall review the determination 
                of the Director and shall set aside such determination 
                if the third party determines that the grounds under 
                subparagraph (A) exist. During the pendency of an 
                appeal under this paragraph, the Director shall stay 
                the applicability of the rates established pursuant to 
                paragraph (1).
                  ``(C) Effect of final determination.--In an appeal 
                under this paragraph--
                          ``(i) if a final determination is made that 
                        the grounds under subparagraph (A) exist, the 
                        third party hearing such appeal shall make a 
                        determination of how much to reduce the 
                        chargeable risk premium rate for flood 
                        insurance coverage for the property involved in 
                        the appeal from the amount required under 
                        paragraph (1) and the Director shall promptly 
                        reduce the chargeable risk premium rate for 
                        such property by such amount; and
                          ``(ii) if a final determination is made that 
                        the grounds under subparagraph (A) do not 
                        exist, the Director shall promptly increase the 
                        chargeable risk premium rate for such property 
                        to the amount established pursuant to paragraph 
                        (1) 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 Two Floods and You Are Out of 
                the Taxpayers' Pocket Act of 2003, the Director shall 
                submit a report to the House of Representatives and the 
                Senate describing the rules, procedures, and 
                administration for appeals under this paragraph.
  ``(h) Discretionary Actions in Cases of Fraudulent Claims.--If the 
Director determines that a fraudulent claim was made under flood 
insurance coverage under this title for a severe repetitive loss 
property, the Director may--
          ``(1) cancel the policy and deny the provision to such 
        policyholder of any new flood insurance coverage under this 
        title for the property; or
          ``(2) refuse to renew the policy with such policyholder upon 
        expiration and deny the provision of any new flood insurance 
        coverage under this title to such policyholder for the 
        property.
  ``(i) Funding.--Pursuant to section 1310(a)(8), the Director may use 
amounts from the National Flood Insurance Fund to provide assistance 
under this section in each of fiscal years 2004, 2005, 2006, 2007, and 
2008, except that the amount so used in each such fiscal year may not 
exceed $40,000,000 and shall remain available until expended. 
Notwithstanding any other provision of this title, amounts made 
available pursuant to this subsection shall not be subject to 
offsetting collections through premium rates for flood insurance 
coverage under this title.
  ``(j) Termination.--The Director may not provide assistance under 
this section to any State or community after September 30, 2008.''.
  (b) Availability of National Flood Insurance Fund Amounts.--Section 
1310(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4017(a)) 
is amended--
          (1) in paragraph (7), by striking ``and'' at the end; and
          (2) by striking paragraph (8) and inserting the following new 
        paragraph:
          ``(8) for financial assistance under section 1362 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 1362(i); and''.

SEC. 5. ENHANCED AUTHORITY IN FLOOD MITIGATION ASSISTANCE PROGRAM.

  (a) Mitigation Assistance for Repetitive Claims Properties.--Section 
1366(e) of the National Flood Insurance Act of 1968 (42 U.S.C. 4104c) 
is amended--
          (1) by striking paragraph (4) and inserting the following new 
        paragraph:
          ``(4) Standard for assistance.--In providing grants under 
        this subsection for mitigation activities, the Director shall 
        give first priority for funding to repetitive claims 
        properties, or to such subsets of such properties as the 
        Director may establish pursuant to subsection (n)(2), that the 
        Director determines are the most cost-effective for the 
        taxpayers of the United States, are in the best interests of 
        the National Flood Insurance Fund, and for which matching 
        amounts under subsection (f) are available.''; and
          (2) by adding at the end the following new paragraph:
          ``(6) Notice.--Upon making an offer to conduct any eligible 
        mitigation activity under paragraph (5) with respect to a 
        repetitive claims property or a severe repetitive loss property 
        (as such term is defined in section 1362(b)) using amounts 
        provided under this section, the State or community shall 
        notify each holder of a recorded interest on the property of 
        such offer and activity.''.
  (b) Limitations on Property Acquisition.--Section 1366(e)(5)(C) of 
the National Flood Insurance Act of 1968 (42 U.S.C. 4104c(e)(5)(C)) is 
amended by striking ``for public use, as the Director determines is 
consistent with sound land management and use in such area'' and 
inserting the following: ``except that amounts provided under this 
section may not be used for acquisition of any property unless--
                          ``(i) 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 clauses (i) and (ii) 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); and
                          ``(ii) the amount of purchase offer is not 
                        less than the greatest of--
                                  ``(I) 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;
                                  ``(II) 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
                                  ``(III) an amount equal to the fair 
                                market value of the property 
                                immediately before the most recent 
                                flood event affecting the property''.
  (c) Waiver of Limitations on Assistance.--Section 1366(f) of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4104c(f)) is amended by 
striking paragraph (3) and inserting the following new paragraph:
          ``(3) Waiver.--The Director may waive the dollar amount 
        limitations under paragraphs (1) and (2) for any State or 
        community--
                  ``(A) for any 5-year period when a major disaster or 
                emergency declared by the President (pursuant to the 
                Robert T. Stafford Disaster Relief and Emergency 
                Assistance Act (42 U.S.C. 5121 et seq.)) as a result of 
                flood conditions is in effect with respect to areas in 
                the State or community; or
                  ``(B) whenever the Director determines that 
                repetitive claims properties are located within such 
                State or community and that waiver of the cost 
                limitations is cost-effective and in the best interests 
                of the National Flood Insurance Fund.''.
  (d) Penalties for Refusal to Mitigate and Fraudulent Claims.--Section 
1366 of the National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is 
amended--
          (1) by striking subsection (k);
          (2) by redesignating subsection (j) as subsection (l); and
          (3) by inserting after subsection (i) the following new 
        subsections:
  ``(j) Increase to Actuarial Rates in Cases of Refusal to Mitigate.--
          ``(1) In general.--In any case in which the owner of a 
        repetitive claims property refuses an offer of a State or 
        community to conduct, with respect to such property, mitigation 
        activities under subsection (e) under a mitigation plan 
        approved by the Director, the Director shall--
                  ``(A) notify each holder of a recorded interest on 
                the property of such refusal; and
                  ``(B) increase the chargeable risk premium rate for 
                flood insurance coverage under this title for the 
                property to an amount equal to the applicable estimated 
                risk premium rate for such area (or subdivision 
                thereof) under section 1307(a)(1) and apply appropriate 
                loss deductibles.
          ``(2) Appeals.--
                  ``(A) Mitigation actions.--Any owner of a repetitive 
                claims property may appeal a determination of the 
                Director to take action under paragraph (1)(B) 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) 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.
                          ``(iii) The flooding that resulted in the 
                        flood insurance claims payments described in 
                        subsection (n)(2) for the property resulted 
                        from significant actions by a third party in 
                        violation of Federal, State, or local law, 
                        ordinance, or regulation.
                          ``(iv) In purchasing the property, the owner 
                        relied upon flood insurance rate maps of the 
                        Federal Emergency Management Agency that were 
                        current at the time and did not indicate that 
                        the property was located in an area having 
                        special flood hazards.
                  ``(B) Procedure.--An appeal under this paragraph of a 
                determination of the Director shall be made by filing, 
                with the Director, a request for an appeal within 90 
                days after receiving notice of such determination. Upon 
                receiving the request, the Director shall select, from 
                a list of independent third parties compiled by the 
                Director for such purpose, a party to hear such appeal. 
                Within 90 days after filing of the request for the 
                appeal, such third party shall review the determination 
                of the Director and shall set aside such determination 
                if the third party determines that the grounds under 
                subparagraph (A) exist. During the pendency of an 
                appeal under this paragraph, the Director shall stay 
                the applicability of the rates established pursuant to 
                paragraph (1).
                  ``(C) Effect of final determination.--In an appeal 
                under this paragraph--
                          ``(i) if a final determination is made that 
                        the grounds under subparagraph (A) exist, the 
                        third party hearing such appeal shall make a 
                        determination of how much to reduce the 
                        chargeable risk premium rate for flood 
                        insurance coverage for the property involved in 
                        the appeal from the amount required under 
                        paragraph (1) and the Director shall promptly 
                        reduce the chargeable risk premium rate for 
                        such property by such amount; and
                          ``(ii) if a final determination is made that 
                        the grounds under subparagraph (A) do not 
                        exist, the Director shall promptly increase the 
                        chargeable risk premium rate for such property 
                        to the amount established pursuant to paragraph 
                        (1) 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 Mitigation 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 Two Floods and You Are Out of 
                the Taxpayers' Pocket Act of 2003, the Director shall 
                submit a report to the House of Representatives and the 
                Senate describing the rules, procedures, and 
                administration for appeals under this paragraph, which 
                shall be submitted together with the report required 
                under section 1362(g)(2)(E).
  ``(k) 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 repetitive claims property, 
the Director may--
          ``(1) cancel the policy and deny the provision to such 
        policyholder of any new flood insurance coverage under this 
        title for the property; or
          ``(2) refuse to renew the policy with such policyholder upon 
        expiration and deny the provision of any new flood insurance 
        coverage under this title to such policyholder for the 
        property.''.
  (e) 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 new subsection:
  ``(m) Coordination With States and Communities.--The Director shall, 
in consultation and coordination with States and communities:
          ``(1) Identification of repetitive claims properties.--
        Identify repetitive claims properties and properties at risk of 
        becoming repetitive claims properties.
          ``(2) Management of 100-year floodplain.--Take such actions 
        as are appropriate to encourage and improve participation of 
        owners of properties that are not located in areas having 
        special flood hazards but are located within the 100-year 
        floodplain.''.
  (f) Definition of Repetitive Claims Property.--Section 1366 of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is amended by 
adding at the end the following new subsection:
  ``(n) Definitions.--For purposes of this section:
          ``(1) Community.--The term `community' means--
                  ``(A) a political subdivision that--
                          ``(i) has zoning and building code 
                        jurisdiction over a particular area having 
                        special flood hazards; and
                          ``(ii) is participating in the national flood 
                        insurance program; or
                  ``(B) a political subdivision of a State, or other 
                authority, that is designated to develop and administer 
                a mitigation plan and manage projects by political 
                subdivisions, all of which meet the requirements of 
                subparagraph (A).
          ``(2) Repetitive claims property.--The term `repetitive 
        claims property' means, without regard to the ownership of the 
        property, a property with respect to which claim payments for 
        losses have been made--
                  ``(A) under flood insurance coverage under this 
                title,
                  ``(B) on more than one occasion within a 10-year 
                period, and
                  ``(C) for which the cumulative value of the amount by 
                which such claims exceed the amount of any applicable 
                deductible under such coverage is $5,000 or more,
        The Director may, by regulation, further define subsets of 
        repetitive claims properties for purposes of subsection 
        (e)(4).''.
  (g) Funding.--Section 1367(b) of the National Flood Insurance Act of 
1968 (42 U.S.C. 4104d(b)) is amended--
          (1) by redesignating paragraphs (2) and (3) as paragraphs (3) 
        and (4); and
          (2) by striking paragraph (1) and inserting the following new 
        paragraphs:
          ``(1) in each fiscal year, amounts from the National Flood 
        Insurance Fund not exceeding $20,000,000;
          ``(2) in each of fiscal years 2004, 2005, 2006, 2007, and 
        2008, in addition to amounts under paragraph (1), amounts from 
        the National Flood Insurance Fund not exceeding $40,000,000, to 
        remain available until expended, except that--
                  ``(A) such amounts shall be used only under section 
                1366 for mitigation activities for repetitive claims 
                properties (as such term is defined in section 
                1366(n)); and
                  ``(B) 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; and''.

SEC. 6. 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 new section:
          ``grants for repetitive insurance claims properties
  ``Sec. 1323. (a) In General.--The Director may provide funding for 
mitigation actions that reduce flood damages to repetitive claims 
properties, 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 can not 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 properties 
for which funding is to be provided under this section, the Director 
shall give priority based on the amount of losses to the National Flood 
Insurance Fund that claims for a property have caused or are reasonably 
expected to cause.
  ``(c) Definition.--For purposes of this section, the term `repetitive 
claims property' has the meaning given such term in section 1366(n).''.
  (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 new paragraph:
          ``(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. 7. 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 new subsection:
  ``(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) Properties refusing mitigation assistance.--Any 
        property for which the Director has taken action under section 
        1362(g)(1) or 1366(i)(1).
          ``(3) 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. 8. REMOVING REPETITIVE INSURANCE CLAIMS PROPERTIES FROM FEDERAL 
                    DISASTER ASSISTANCE RESPONSIBILITY.

  (a) In General.--Section 582 of the National Flood Insurance Reform 
Act of 1994 (42 U.S.C. 5154a) is amended--
          (1) by redesignating subsections (d) and (e) as subsections 
        (e) and (f), respectively; and
          (2) by inserting after subsection (c) the following new 
        subsection:
  ``(d) Unmitigated Repetitive Insurance Claims Properties.--
Notwithstanding any other provision of law, no Federal disaster relief 
assistance made available in a flood disaster area may be used to make 
a payment (including any loan assistance payment) for repair, 
replacement, or restoration for damage to a property located in such 
area if--
          ``(1) such property is a repetitive claims property (as such 
        term is defined in section 1366(n) of the National Flood 
        Insurance Act of 1968 (42 U.S.C. 4104c(o)) or a severe 
        repetitive loss property (as such term is defined in section 
        1362(b) of such Act (42 U.S.C. 4103(b)); and
          ``(2) in accordance with such requirements as the Director 
        may establish, mitigation assistance under section 1362 or 1366 
        of the National Flood Insurance Act of 1968 has been offered to 
        the owner of the property, before or after the occurrence of 
        the flood loss events, which was refused by the owner.''.
  (b) Effective Date.--Notwithstanding subsection (f) of section 582 of 
the National Flood Insurance Reform Act of 1994 (as so redesignated by 
paragraph (1)(A) of this subsection), the amendment made by paragraph 
(1) shall apply to disasters declared after the date of the enactment 
of this Act.

SEC. 9. ELECTRONIC DATABASE OF REPETITIVE CLAIMS PROPERTIES.

  Section 1364 of the National Flood Insurance Act of 1968 (42 U.S.C. 
4104a) is amended by adding at the end the following new subsection:
  ``(d) Electronic Database of Repetitive Claims Properties.--The 
Director may, if the Director determines such action is feasible, 
establish and maintain a database identifying by location and address 
all repetitive claims properties (as such term is defined in section 
1366(n)), repetitive loss structures (as such term is defined in 
section 1370), and severe repetitive loss properties (as such term is 
defined in section 1362(b)). If established, the Director shall make 
the database available to the public in a format that may be searched 
electronically. Such a database shall not include any information 
regarding ownership of properties.''.

SEC. 10. 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 new subsection:
  ``(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. 11. 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.

                          Purpose and Summary

    H.R. 253, the Two Floods and You are Out of the Taxpayer's 
Pocket Act of 2003, extends the authorization of the National 
Flood Insurance Program (NFIP) from December 31, 2003 to 
September 30, 2008. This measure creates a pilot program to 
mitigate the severe repetitive loss properties in the NFIP and 
sets up an equitable process for the treatment of policyholders 
who refuse mitigation. This legislation also uses the existing 
Flood Mitigation Assistance Program (FMA) to further mitigate 
repetitive claims properties. Finally, H.R. 253 authorizes 
funds to be transferred from the National Flood Insurance Fund 
into the National Mitigation Fund for both the pilot program 
and the FMA program for purposes of mitigation.

                  Background and Need for Legislation

    The NFIP was created as part of the National Flood 
Insurance Act of 1968. Prior to that time, insurance companies 
generally did not offer coverage for flood disasters because of 
the high risks involved. National flood insurance is available 
in almost 20,000 communities across the United States and its 
territories. 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 NFIP insures approximately 4.4 million policyholders. 
Approximately 48,000 properties currently insured have 
experienced, within a ten-year period, two or more flood claims 
where each exceeds $1,000 over the applicable deductible. These 
properties, which are considered as repetitive loss structures 
by the Federal Emergency Management Agency (FEMA), cost the 
NFIP about $200 million annually.
    Approximately 10,000 of these properties currently insured 
under the program have either two or three claims that 
cumulatively exceed the building value or four or more claims, 
each exceeding $1,000 over the applicable deductible. These 
properties, while comprising approximately one percent of the 
currently insured properties, are expected to account for 25 to 
30 percent of claims paid. The vast majority of repetitive-loss 
properties were built before community implementation of 
floodplain management standards and are thus eligible for 
subsidized flood insurance which is below the actuarial risk 
rate. FEMA has neither the funds nor the statutory tools to 
mitigate these repetitive loss properties.
    The NFIP has been amended or reauthorized dozens of times 
since the late 1960s as part of America's public policy 
response to flooding. However, the 107th Congress adjourned at 
the end of November without extending FEMA's statutory 
authority to issue flood insurance policies beyond December 31, 
2002. On January 13, 2002, the President signed into law 
bipartisan legislation, H.R. 11 (Public Law 108-3), which 
reauthorized the NFIP retroactively from January 1 through 
December 31, 2003. The NFIP was reauthorized for only one year 
so that potential changes to the program could be considered 
during 2003.

                                Hearings

    No hearings were held on this legislation. However, the 
Subcommittee on Housing and Community Opportunity held a 
hearing on April 1, 2003 entitled ``The National Flood 
Insurance Program: Review and Reauthorization.'' The following 
witnesses testified: The Honorable Richard H. Baker, M.C.; The 
Honorable Doug Bereuter, M.C.; The Honorable Earl Blumenauer, 
M.C.; Mr. Anthony Lowe, Mitigation Division Director and Flood 
Insurance Administrator, Department of Homeland Security; Mr. 
Chad Berginnis, Vice-Chair of the Association of State 
Floodplain Managers; Mr. Fletcher J. Wiley, Flood Insurance 
Task Force Chair of the Independent Insurance Agents and 
Brokers of America; Mr. Gerald Nielsen, Nielsen Law Firm, 
Metairie, Louisiana; and Mr. Rick Willetts, III, President and 
CEO, Cooperative Bank of Wilmington, North Carolina on behalf 
of America's Community Bankers.

                        Committee Consideration

    On July 23, 2003, the Subcommittee on Housing and Community 
Opportunity was discharged from the further consideration of 
H.R. 253 by unanimous consent and the Committee on Financial 
Services met in open session to consider the bill. The 
Committee ordered the bill reported to the House with a 
favorable recommendation, with an amendment, by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken in conjunction with the consideration 
of this legislation. A motion by Mr. Oxley to report the bill 
to the House with a favorable recommendation was agreed to by a 
voice vote.
    The following amendments were considered:

        s  An amendment in the nature of a substitute offered 
        by Mr. Bereuter, no. 1, reauthorizing the National 
        Flood Insurance Program through September 30, 2008 and 
        setting forth policies as to how to address repetitive 
        loss properties, was agreed to by a voice vote, as 
        amended.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Ney, no. 1a, clarifying the 
        application of certain provisions, was agreed to by a 
        voice vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Ms. Hooley of Oregon, no. 1b, 
        reiterating the responsibility of FEMA to map 
        mudslides, was agreed to by a voice vote.
          An amendment to the amendment in the nature of a 
        substitute offered by Mr. Baker, no. 1c, increasing the 
        thresholds necessary for a property to qualify as a 
        severe repetitive loss for purposes of mitigation, was 
        agreed to by a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee made findings that are 
reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    The Department of Homeland Security will use the authority 
in this legislation to dramatically reduce both severe 
repetitive loss properties and repetitive claims properties as 
defined in H.R. 253. The two main objectives are: the 
mitigation of designated properties so as to protect 
policyholders from the dangers of floods; and the enhancement 
of the long-term solvency of the NFIP.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of budget authority, entitlement authority, or 
tax expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, September 3, 2003.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 253, the Two 
Floods and You Are Out of the Taxpayers' Pocket Act of 2003.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kim Cawley.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 253--Two Floods and You Are Out of the Taxpayers Pocket Act of 
        2003

    Summary: H.R. 253 would extend authority to operate the 
National Flood Insurance Program (NFIP) within the Department 
of Homeland Security (DHS) until 2008. Under current law, the 
program's authority expires on December 31, 2003. The bill also 
would establish a pilot program to give states and local 
communities financial assistance for mitigating severe 
repetitive loss properties (properties that have made four or 
more flood insurance claims exceeding $5,000 each under the 
National Flood Insurance Program). The bill would authorize the 
appropriation of $40 million a year over the 2004-2008 period 
for this new pilot program. H.R. 253 also would increase the 
amounts authorized to be appropriated for the existing flood 
mitigation program by $40 million a year over the 2004-2008 
period. Finally, the bill would authorize the appropriation of 
an additional $10 million a year for mitigation of individual 
properties in states and communities that do not have the 
capacity to manage their own mitigation programs.
    Assuming appropriation if the authorized amounts, CBO 
estimates that implementing the bill would cost $315 million 
over the 2004-2008 period. Enacting H.R. 253 would affect 
direct spending, but CBO estimates that impact would be 
insignificant each year relative to the budget resolution 
baseline (which assumes the flood insurance program is 
extended).
    H.R. 253 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
State, local, and tribal governments may benefit from the grant 
program to reduce the number of claims made by certain property 
owners. Any costs associated with this program would be a 
condition of aid and thus would be incurred voluntarily.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 253 is shown in the following table. 
The costs of this legislation fall within budget function 450 
(community and regional development).

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2004     2005     2006     2007     2008
----------------------------------------------------------------------------------------------------------------
                                CHANGES IN SPENDING SUBJECT TO APPROPRIATION \1\
 Authorization level................................................       90       90       90       90       90
Estimated outlays..................................................       18       45       72       90       90
----------------------------------------------------------------------------------------------------------------
\1\ H.R. 253 also would reduce direct spending by less than $1 million a year.

    Basis of estimate: For this estimate, CBO assumes that H.R. 
253 will be enacted early in fiscal year 2004 and that the 
authorized amounts will be appropriated each year. Estimates of 
outlays are based on historical spending patterns of similar 
programs and information from the Department of Homeland 
Security.

Spending subject to appropriation

    H.R 253 would authorize the appropriation of $90 million a 
year over the 2004-2008 period and an additional $10 million a 
year after 2008 for mitigation programs to address repetive 
losses from floods. Assuming appropriation of the authorized 
amounts. CBO estimates that implementing this bill would cost 
$315 million over the 2004-2008 period.
    According to DHS, there are currently around 48,000 insured 
properties that have experienced multiple floods and would 
benefit from mitigation activities such as elevation, 
relocation, demolition, or flood-proofing. Mitigating those 
properties could result in fewer claims paid following a 
subsequent flood. According to DHS, it would take 10 to 12 
years to realize sufficient savings to pay for the cost of 
mitigating a repetitive-loss property. CBO expects that this 
program would yield savings to the NFIP; however, no savings 
can be attributed to H.R. 253 because the size and duration of 
any mitigation program would depend on amounts provided in 
future appropriation acts.
    Under the bill, if an owner of a property refuses to 
participate in federal mitigation programs, then the property 
would no longer be eligible for subsidized insurance premiums. 
Making the insurance rate actuarially sound would result in an 
increase in premiums collected to the federal government. (In 
addition, that same property owner who refuses mitigation would 
not be eligible for disaster relief funding if a subsequent 
flood damages their property.) The amount of any additional 
premiums collected under this provision would also depend on 
the parameters of the mitigation program which be determined in 
future appropriation acts and thus cannot be attributed to H.R. 
253.

Direct spending

    Reauthorization of the National Flood Insurance Program. 
H.R. 253 would reauthorize the NFIP through 2008. Consistent 
with section 257 of the Balanced Budget and Emergency Deficit 
Control Act, which specifies that certain expiring programs 
should be assumed to continue for budget projection proposes, 
the baseline projections underlying the current Congressional 
budget resolution assume that the National Flood Insurance 
Program continues beyond its scheduled expiration date. Over 
the near term, CBO projects that premiums collected by the 
National Flood Insurance Fund equal claims paid from the fund. 
That assumption is used because, while projecting premiums paid 
to the NFIP is straightforward, the level of claims paid in any 
year is a function of the incidence and severity of floods 
which cannot be projected on an annual basis. Over the long 
term, the NFIP is not considered to be actually sound because 
some properties receive subsidized insurance.
    Actuarial Rate Properties. H.R. 253 would make certain 
federally owned coastal and river properties that are leased to 
nonfederal entities subject to actuarially sound insurance 
premiums. CBO estimates that this provision would increase the 
amount of premiums collected, but the increase would be less 
than $1 million a year because of the small number of 
properties involved.
    Intergovernmental and private-sector impact: H.R. 253 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. State, local, and tribal governments may 
benefit from the grant program to reduce the number of claims 
made by certain property owners. Any costs associated with this 
program would be a condition of aid and thus would be incurred 
voluntarily.
    Estimate prepared by: Federal Costs: Julie Middleton. 
Impact on State, Local, and Tribal Governments: Melissa 
Merrell. Impact on the Private Sector: Cecil McPherson.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
defense and general welfare of the United States), and clause 3 
(relating to the power to regulate foreign and interstate 
commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short Title

    This section establishes the short title of the bill, the 
``Two Floods and You are Out of the Taxpayer's Pocket Act of 
2003.''

Section 2. Congressional Findings

    This section provides certain findings by Congress 
regarding the need for the legislation.

Section 3. Extension of Program and Consolidation of Authorizations

    This section amends the National Flood Insurance Act of 
1968 by extending the National Flood Insurance Program through 
September 30, 2008.

Section 4. Establishment of Pilot Program for Mitigation of Severe 
        Repetitive Loss Properties

    This section amends the National Flood Insurance Act of 
1968 by adding a new section 1362 which establishes a pilot 
program for the mitigation of severe repetitive loss properties 
(Pilot Program). Under this section, the Director of FEMA may 
provide financial assistance to States and communities for the 
mitigation of severe repetitive loss properties.
    The legislation defines ``severe repetitive loss 
properties'' as properties (1) for which 4 or more separate 
NFIP flood insurance claims payments have been made prior to 
the date of the enactment of this legislation, with the amount 
of each claim exceeding $5,000 with the cumulative amount of 
such claims payments exceeding $20,000; (2) for which 4 or more 
separate NFIP claims payments have been made after the date of 
enactment of this legislation, with the amount of each claim 
exceeding $3,000 with the cumulative amount of those claims 
payments exceeding $15,000; or (3) for which 2 or more separate 
NFIP claims payments cumulatively exceed the value of the 
insured property.
    The legislation also requires that the Director of FEMA 
provide mitigation offers for properties under the Pilot 
Program in the order that will result in the greatest amount of 
savings to the National Flood Insurance Fund in the shortest 
period of time. Mitigation activities include elevation, 
relocation, demolition, floodproofing of structures, minor 
physical localized flood control projects, and buyouts.
    Severe repetitive loss properties will be charged actuarial 
based NFIP rates if the owner of the property has refused 
FEMA's offer of flood mitigation measures, such as an elevation 
or buy-out. The Director is authorized to offer the 
policyholder a higher deductible for the flood insurance policy 
which would result in a lower premium payment if mitigation is 
refused.
    Any owner of a severe repetitive loss property may appeal 
an increase to an actuarial rate of insurance to an independent 
third party. One of the grounds for appeal is that the owner of 
the property will not be able to purchase a replacement primary 
residence of comparable value that is functionally equivalent 
to their current residence.
    Up to an additional $40 million for fiscal years 2004, 
2005, 2006, 2007, and 2008 may be transferred from the National 
Flood Insurance Fund to the National Flood Mitigation Fund for 
severe repetitive loss properties and will remain available 
until expended. The policyholders will not be subject to higher 
premium rates for flood insurance coverage because of this 
transfer from the insurance fund into the mitigation fund. As a 
matter of clarification, the policy service fee charged by FEMA 
for each policy also will not be increased because of this 
transfer.
    It is the Committee's intent that States and communities 
that receive grants under the Pilot Program will have a 
mitigation plan approved under section 1366(c) of the National 
Flood Insurance Act of 1968. This mitigation plan is different 
than the plan which is necessary for certain States that 
receive a partial waiver of the non-Federal cost share for 
mitigation.

Section 5. Enhanced Authority in FMA Program

    This section amends section 1366 of the National Flood 
Insurance Act of 1968 by using the existing FMA program to 
mitigate repetitive claims properties, which are defined as two 
or more claims, with the cumulative value of such claims of 
$5,000 or more, exceeding the amount of any applicable 
deductible, within any 10 year time period. The Director of 
FEMA must give first priority for funding to the activities for 
repetitive claims properties that the Director determines are 
the most cost-effective for the taxpayers of the United States 
and are in the best interests of the National Flood Insurance 
Fund. In this section, the effect of the refusal to mitigate 
and the appeals process is the same as it is in section 4.
    Up to an additional $20 million will be transferred from 
the insurance fund into the mitigation fund for each fiscal 
year. (This has been the current practice in recent 
appropriations laws).
    Up to an additional $40 million for fiscal years 2004, 
2005, 2006, 2007, and 2008 may be transferred from the National 
Flood Insurance Fund to the National Flood Mitigation Fund for 
repetitive claims properties and will remain available until 
expended. The policyholders will not be subject to higher 
premium rates for flood insurance coverage because of this 
transfer from the insurance fund into the mitigation fund. As a 
matter of clarification, the policy service fee charged by FEMA 
for each policy also will not be increased because of this 
transfer.
    As a matter of clarification, this section does not alter 
the existing FMA program as it relates to non-repetitive claims 
properties. Thus, these properties will continue to be eligible 
for the FMA program if it is cost effective and in the best 
interest of the NFIP.

Section 6. FEMA Authority to Fund Mitigation Activities for Individual 
        Repetitive Claims Properties

    This section creates a new section 1323 of the National 
Flood Insurance Act of 1968 by authorizing the Director to 
provide funding for mitigation actions for repetitive claims 
properties if those activities are in the best interest of the 
National Flood Insurance Fund and cannot be funded under the 
Flood Mitigation Assistance Program because either (1) the 
requirements of the Flood Mitigation Assistance Program are not 
being met by the State or community in which the property is 
located; or (2) the State or community does not have the 
capacity to manage such activities.
    Up to an additional $10 million will be transferred from 
the National Flood Insurance Fund into the National Mitigation 
Fund for any fiscal year for these individual repetitive claims 
properties. The policyholders will not be subject to offsetting 
collections through premium rates for flood insurance coverage. 
As a matter of clarification, the policy service fee charged by 
FEMA for each policy shall also will not be increased because 
of this transfer.

Section 7. Actuarial Rate Properties

    This section amends section 1308 of the National Flood 
Insurance Act of 1968 by charging actuarial based NFIP rates 
immediately for Federally leased properties 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. These actuarial rates are not 
conditioned upon any other factor.

Section 8. Removing Repetitive Claims Properties from Federal Disaster 
        Assistance Responsibility

    This section amends section 582 of the National Flood 
Insurance Reform Act of 1994 by providing that, if an owner of 
either a severe repetitive loss property or a repetitive claims 
property refuses an offer of mitigation, no Federal disaster 
relief assistance can be used to make payment for repair, 
replacement, or restoration of such property.

Section 9. Electronic Database of Repetitive Claims Properties

    This section adds a new subsection to section 1364 of the 
National Flood Insurance Act of 1968. Under this section, the 
Director may, if the Director determines feasible, establish 
and maintain a database identifying by location and address all 
repetitive loss properties and severe repetitive loss 
properties. If established, the Director will make the database 
available to the public in a format that may be searched 
electronically. The Committee notes that it is important that 
FEMA continue to improve the quality of its database and make 
corrections when buildings have been mitigated to remove those 
buildings from the list.

Section 10. Replacement of Mobile Homes on Original Sites

    This section adds a new section 1315 to the National Flood 
Insurance Act of 1968 which provides that the replacement of 
mobile homes on any sites will not affect the eligibility of 
any community to participate in the flood insurance program if 
(1) the mobile home was previously located on the site; (2) the 
mobile home was relocated from the site because of flooding 
that threatened or affected the site; and (3) the 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.

Section 11. Reiteration of FEMA Responsibility to Map Mudslides

    This section provides that, as directed in section 1360(b) 
of the National Flood Insurance Act, the Director of FEMA is 
again directed to accelerate the identification of risk zones 
within flood-prone and mudslide-prone areas in order to make 
known the degree of hazard within each such zone at the 
earliest possible date.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

NATIONAL FLOOD INSURANCE ACT OF 1968

           *       *       *       *       *       *       *



TITLE XIII--NATIONAL FLOOD INSURANCE

           *       *       *       *       *       *       *



CHAPTER I--THE NATIONAL FLOOD INSURANCE PROGRAM

           *       *       *       *       *       *       *



               ESTABLISHMENT OF CHARGEABLE PREMIUM RATES

  Sec. 1308. (a)  * * *

           *       *       *       *       *       *       *

  [(c) Subject only to the limitation under subsection (e), the 
chargeable rate with respect to any property, the construction 
or substantial improvement of which the Director determines has 
been started after December 31, 1974, or 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, shall not be less than the 
applicable estimated risk premium rate for such area (or 
subdivision thereof) under section 1307(a)(1).]
  (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) Properties refusing mitigation assistance.--Any 
        property for which the Director has taken action under 
        section 1362(g)(1) or 1366(i)(1).
          (3) 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.

           *       *       *       *       *       *       *

  (e) Annual Limitation on Premium Increases.--
[Notwithstanding] Except with respect to properties described 
under paragraph (2) or (3) of subsection (c) and 
notwithstanding any other provision of this title, the 
chargeable risk premium rates for flood insurance under this 
title for any properties within any single risk classification 
may not be increased by an amount that would result in the 
average of such rate increases for properties within the risk 
classification during any 12-month period exceeding 10 percent 
of the average of the risk premium rates for properties within 
the risk classification upon the commencement of such 12-month 
period.

           *       *       *       *       *       *       *


                               FINANCING

  Sec. 1309. (a) All authority which was vested in the Housing 
and Home Finance Administrator by virtue of section 15(e) of 
the Federal Flood Insurance Act of 1956 (70 Stat. 1084) 
(pertaining to the issue of notes or other obligations or the 
Secretary of the Treasury), as amended by subsections (a) and 
(b) of section 1303 of this Act, shall be available to the 
Director for the purpose of carrying out the flood insurance 
program under this title; except that the total amount of notes 
and obligations which may be issued by the Director pursuant to 
such authority (1) without the approval of the President, may 
not exceed $500,000,000, and (2) with the approval of the 
President, may not exceed $1,500,000,000 [through December 31, 
2003, and] through the date specified in section 1319, and 
$1,000,000,000 thereafter. The Director shall report to the 
Committee on Banking, Finance and Urban Affairs of the House of 
Representatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate at any time when he requests the 
approval of the President in accordance with the preceding 
sentence.

           *       *       *       *       *       *       *


                     NATIONAL FLOOD INSURANCE FUND

  Sec. 1310. (a) To carry out the flood insurance program 
authorized by this title, the Director shall establish in the 
Treasury of the United States a National Flood Insurance Fund 
(hereinafter referred to as the ``fund'') which shall be an 
account separate from any other accounts or funds available to 
the Director and shall be available as described in subsection 
(f), without fiscal year limitation (except as otherwise 
provided in this section)--
          (1)  * * *

           *       *       *       *       *       *       *

          (7) for transfers to the National Flood Mitigation 
        Fund, but only to the extent provided in section 
        1367(b)(1); [and]
          [(8) for costs of preparing the report under section 
        577 of the Riegle Community Development and Regulatory 
        Improvement 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 enactment of 
        the Riegle Community Development and Regulatory 
        Improvement Act of 1994.]
          (8) for financial assistance under section 1362 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 
        1362(i); and
          (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.

           *       *       *       *       *       *       *


                   STATE AND LOCAL LAND USE CONTROLS

  Sec. 1315. (a)  * * *

           *       *       *       *       *       *       *

  (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.

           *       *       *       *       *       *       *


                           PROGRAM EXPIRATION

  Sec. 1319. No new contract for flood insurance under this 
title shall be entered into [after December 31, 2003.] after 
September 30, 2008.

           *       *       *       *       *       *       *


           GRANTS FOR REPETITIVE INSURANCE CLAIMS PROPERTIES

  Sec. 1323. (a) In General.--The Director may provide funding 
for mitigation actions that reduce flood damages to repetitive 
claims properties, 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 can not 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 
properties for which funding is to be provided under this 
section, the Director shall give priority based on the amount 
of losses to the National Flood Insurance Fund that claims for 
a property have caused or are reasonably expected to cause.
  (c) Definition.--For purposes of this section, the term 
``repetitive claims property'' has the meaning given such term 
in section 1366(n).

           *       *       *       *       *       *       *


  CHAPTER II--ORGANIZATION AND ADMINISTRATION OF THE FLOOD INSURANCE 
PROGRAM

           *       *       *       *       *       *       *


Part A--Industry Program With Federal Financial Assistance

           *       *       *       *       *       *       *


                  EMERGENCY IMPLEMENTATION OF PROGRAM

  Sec. 1336. (a) Notwithstanding any other provisions of this 
title, for the purpose of providing flood insurance coverage at 
the earliest possible time, the Director shall carry out the 
flood insurance program authorized under chapter I [during the 
period ending December 31, 2003, in accordance] during the 
period ending on the date specified in section 1319, in 
accordance with the provisions of this part and the other 
provision of this title insofar as they relate to this part but 
subject to the modifications made by or under subsection (b).

           *       *       *       *       *       *       *


   CHAPTER III--COORDINATION OF FLOOD INSURANCE WITH LAND-MANAGEMENT 
PROGRAMS IN FLOOD-PRONE AREAS

           *       *       *       *       *       *       *


   PILOT PROGRAM FOR MITIGATION OF SEVERE REPETITIVE LOSS PROPERTIES

  Sec. 1362. (a) Authority.--To the extent amounts are made 
available for use under this section, the Director may, subject 
to the limitations of this section, provide financial 
assistance to States and communities for taking actions with 
respect to severe repetitive loss properties (as such term is 
defined in subsection (b)) to mitigate flood damage to such 
properties and losses to the National Flood Insurance Fund from 
such properties.
  (b) Severe Repetitive Loss Property.--For purposes of this 
section, the term ``severe repetitive loss property'' has the 
following meaning:
          (1) Single-family properties.--In the case of a 
        property consisting of one to four 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 four or more separate 
                        claims payments have been made under 
                        flood insurance coverage under this 
                        title before the date of the enactment 
                        of the Two Floods and You Are Out of 
                        the Taxpayers' Pocket Act of 2003, with 
                        the amount of each such claim exceeding 
                        $5,000, and with the cumulative amount 
                        of such claims payments exceeding 
                        $20,000;
                          (ii) for which four or more separate 
                        claims payments have been made under 
                        flood insurance coverage under this 
                        title after the date of the enactment 
                        of the Two Floods and You Are Out of 
                        the Taxpayers' Pocket Act of 2003, with 
                        the amount of each such claim exceeding 
                        $3,000, and with the cumulative amount 
                        of such claims payments exceeding 
                        $15,000; or
                          (iii) for which at least two 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 five 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 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.
          (2) Purchase.--To purchase severe repetitive loss 
        properties, subject to subsection (f).
  (d) Matching Requirement.--
          (1) In general.--Except as provided in paragraph (2), 
        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) Waiver.--
                  (A) Authority.--Subject to subparagraph (B), 
                the Director may waive the limitation under 
                paragraph (1) for any State, and for the 
                communities located in that State, with respect 
                to a year, if, for such year--
                          (i) 5 percent or more of the total 
                        number of severe repetitive loss 
                        properties in the United States are 
                        located in such State; and
                          (ii) the State submits a plan to the 
                        Director specifying how the State 
                        intends to reduce the number of severe 
                        repetitive loss properties and the 
                        Director determines, after consultation 
                        with State and technical experts, that 
                        the State has taken actions to reduce 
                        the number of such properties.
                  (B) Limitation.--In each waiver under 
                subparagraph (A), the Director may waive the 
                limitation under paragraph (1) only to the 
                extent that the State or community involved is 
                required to contribute, for each severe 
                repetitive loss property for which grant 
                amounts are provided, not less than 10 percent 
                of the cost of the activities for such 
                properties that are to be funded with grant 
                amounts.
          (3) Non-federal funds.--For purposes of this 
        subsection, the term ``non-Federal funds'' includes 
        State or local agency funds, in-kind contributions, any 
        salary paid to staff to carry out the eligible 
        activities of the recipient, the value of the time and 
        services contributed by volunteers to carry out such 
        activities (at a rate determined by the Director), and 
        the value of any donated material or building and the 
        value of any lease on a building.
  (e) Standards for Mitigation Offers.--The program under this 
section for providing assistance for eligible activities for 
severe repetitive loss properties shall be subject to the 
following limitations:
          (1) Priority.--In determining the properties for 
        which to provide assistance for eligible activities 
        under subsection (c), the Director shall provide 
        assistance for properties in the order that will result 
        in the greatest amount of savings to the National Flood 
        Insurance Fund in the shortest period of time.
          (2) Offers.--The Director shall provide assistance in 
        a manner that permits States and communities to make 
        offers to owners of severe repetitive loss properties 
        to take eligible activities under subsection (c) as 
        soon as is practicable.
          (3) Notice.--Upon making an offer to provide 
        assistance with respect to a property for any eligible 
        activity under subsection (c), the State or community 
        shall notify each holder of a recorded interest on the 
        property of such offer and activity.
  (f) Purchase Offers.--A State or community may take action 
under subsection (c)(2) to purchase a severe repetitive loss 
property only if the following requirements are met:
          (1) Use of property.--The State or community enters 
        into an agreement with the Director that provides 
        assurances that the property purchased will be used in 
        a manner that is consistent with the requirements of 
        clauses (i) and (ii) 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) 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.
  (g) Increase to Actuarial Rates 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) increase the chargeable risk premium rate 
                for flood insurance coverage under this title 
                for the property to an amount equal to the 
                applicable estimated risk premium rate for such 
                area (or subdivision thereof) under section 
                1307(a)(1) and apply appropriate loss 
                deductibles.
          (2) 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) 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) 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.
                          (iii) 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.
                          (iv) In purchasing the property, the 
                        owner relied upon flood insurance rate 
                        maps of the Federal Emergency 
                        Management Agency that were current at 
                        the time and did not indicate that the 
                        property was located in an area having 
                        special flood hazards.
                  (B) Procedure.--An appeal under this 
                paragraph of a determination of the Director 
                shall be made by filing, with the Director, a 
                request for an appeal within 90 days after 
                receiving notice of such determination. Upon 
                receiving the request, the Director shall 
                select, from a list of independent third 
                parties compiled by the Director for such 
                purpose, a party to hear such appeal. Within 90 
                days after filing of the request for the 
                appeal, such third party shall review the 
                determination of the Director and shall set 
                aside such determination if the third party 
                determines that the grounds under subparagraph 
                (A) exist. During the pendency of an appeal 
                under this paragraph, the Director shall stay 
                the applicability of the rates established 
                pursuant to paragraph (1).
                  (C) Effect of final determination.--In an 
                appeal under this paragraph--
                          (i) if a final determination is made 
                        that the grounds under subparagraph (A) 
                        exist, the third party hearing such 
                        appeal shall make a determination of 
                        how much to reduce the chargeable risk 
                        premium rate for flood insurance 
                        coverage for the property involved in 
                        the appeal from the amount required 
                        under paragraph (1) and the Director 
                        shall promptly reduce the chargeable 
                        risk premium rate for such property by 
                        such amount; and
                          (ii) if a final determination is made 
                        that the grounds under subparagraph (A) 
                        do not exist, the Director shall 
                        promptly increase the chargeable risk 
                        premium rate for such property to the 
                        amount established pursuant to 
                        paragraph (1) 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 Two Floods and 
                You Are Out of the Taxpayers' Pocket Act of 
                2003, the Director shall submit a report to the 
                House of Representatives and the Senate 
                describing the rules, procedures, and 
                administration for appeals under this 
                paragraph.
  (h) Discretionary Actions in Cases of Fraudulent Claims.--If 
the Director determines that a fraudulent claim was made under 
flood insurance coverage under this title for a severe 
repetitive loss property, the Director may--
          (1) cancel the policy and deny the provision to such 
        policyholder of any new flood insurance coverage under 
        this title for the property; or
          (2) refuse to renew the policy with such policyholder 
        upon expiration and deny the provision of any new flood 
        insurance coverage under this title to such 
        policyholder for the property.
  (i) Funding.--Pursuant to section 1310(a)(8), the Director 
may use amounts from the National Flood Insurance Fund to 
provide assistance under this section in each of fiscal years 
2004, 2005, 2006, 2007, and 2008, except that the amount so 
used in each such fiscal year may not exceed $40,000,000 and 
shall remain available until expended. Notwithstanding any 
other provision of this title, amounts made available pursuant 
to this subsection shall not be subject to offsetting 
collections through premium rates for flood insurance coverage 
under this title.
  (j) Termination.--The Director may not provide assistance 
under this section to any State or community after September 
30, 2008.

           *       *       *       *       *       *       *


                          NOTICE REQUIREMENTS

  Sec. 1364. (a)  * * *

           *       *       *       *       *       *       *

  (d) Electronic Database of Repetitive Claims Properties.--The 
Director may, if the Director determines such action is 
feasible, establish and maintain a database identifying by 
location and address all repetitive claims properties (as such 
term is defined in section 1366(n)), repetitive loss structures 
(as such term is defined in section 1370), and severe 
repetitive loss properties (as such term is defined in section 
1362(b)). If established, the Director shall make the database 
available to the public in a format that may be searched 
electronically. Such a database shall not include any 
information regarding ownership of properties.

           *       *       *       *       *       *       *


                         MITIGATION ASSISTANCE

  Sec. 1366. (a)  * * *

           *       *       *       *       *       *       *

  (e) Eligible Mitigation Activities.--
          (1)  * * *

           *       *       *       *       *       *       *

          [(4) Priority.--The Director shall make every effort 
        to provide mitigation assistance under this section for 
        mitigation plans proposing activities for repetitive 
        loss structures and structures that have incurred 
        substantial damage.]
          (4) Standard for assistance.--In providing grants 
        under this subsection for mitigation activities, the 
        Director shall give first priority for funding to 
        repetitive claims properties, or to such subsets of 
        such properties as the Director may establish pursuant 
        to subsection (n)(2), that the Director determines are 
        the most cost-effective for the taxpayers of the United 
        States, are in the best interests of the National Flood 
        Insurance Fund, and for which matching amounts under 
        subsection (f) are available.
          (5) Eligible activities.--The Director shall 
        determine whether mitigation activities described in a 
        mitigation plan submitted under subsection (d) comply 
        with the requirements under paragraph (1). Such 
        activities may include--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (C) acquisition by States and communities of 
                properties (including public properties) 
                located in areas having special flood hazards 
                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]  except that amounts provided under this 
                section may not be used for acquisition of any 
                property unless--
                          (i) 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 clauses (i) and (ii) 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); and
                          (ii) the amount of purchase offer is 
                        not less than the greatest of--
                                  (I) 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;
                                  (II) 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
                                  (III) an amount equal to the 
                                fair market value of the 
                                property immediately before the 
                                most recent flood event 
                                affecting the property;

           *       *       *       *       *       *       *

          (6) Notice.--Upon making an offer to conduct any 
        eligible mitigation activity under paragraph (5) with 
        respect to a repetitive claims property or a severe 
        repetitive loss property (as such term is defined in 
        section 1362(b)) using amounts provided under this 
        section, the State or community shall notify each 
        holder of a recorded interest on the property of such 
        offer and activity.

           *       *       *       *       *       *       *

  (f) Limitations on Amount of Assistance.--
          (1)  * * *

           *       *       *       *       *       *       *

          [(3) Waiver.--The Director may waive the dollar 
        amount limitations under paragraphs (1) and (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.]
          (3) Waiver.--The Director may waive the dollar amount 
        limitations under paragraphs (1) and (2) for any State 
        or community--
                  (A) for any 5-year period when a major 
                disaster or emergency declared by the President 
                (pursuant to the Robert T. Stafford Disaster 
                Relief and Emergency Assistance Act (42 U.S.C. 
                5121 et seq.)) as a result of flood conditions 
                is in effect with respect to areas in the State 
                or community; or
                  (B) whenever the Director determines that 
                repetitive claims properties are located within 
                such State or community and that waiver of the 
                cost limitations is cost-effective and in the 
                best interests of the National Flood Insurance 
                Fund.

           *       *       *       *       *       *       *

  (j) Increase to Actuarial Rates in Cases of Refusal to 
Mitigate.--
          (1) In general.--In any case in which the owner of a 
        repetitive claims property refuses an offer of a State 
        or community to conduct, with respect to such property, 
        mitigation activities under subsection (e) under a 
        mitigation plan approved by the Director, the Director 
        shall--
                  (A) notify each holder of a recorded interest 
                on the property of such refusal; and
                  (B) increase the chargeable risk premium rate 
                for flood insurance coverage under this title 
                for the property to an amount equal to the 
                applicable estimated risk premium rate for such 
                area (or subdivision thereof) under section 
                1307(a)(1) and apply appropriate loss 
                deductibles.
          (2) Appeals.--
                  (A) Mitigation actions.--Any owner of a 
                repetitive claims property may appeal a 
                determination of the Director to take action 
                under paragraph (1)(B) 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) 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.
                          (iii) The flooding that resulted in 
                        the flood insurance claims payments 
                        described in subsection (n)(2) for the 
                        property resulted from significant 
                        actions by a third party in violation 
                        of Federal, State, or local law, 
                        ordinance, or regulation.
                          (iv) In purchasing the property, the 
                        owner relied upon flood insurance rate 
                        maps of the Federal Emergency 
                        Management Agency that were current at 
                        the time and did not indicate that the 
                        property was located in an area having 
                        special flood hazards.
                  (B) Procedure.--An appeal under this 
                paragraph of a determination of the Director 
                shall be made by filing, with the Director, a 
                request for an appeal within 90 days after 
                receiving notice of such determination. Upon 
                receiving the request, the Director shall 
                select, from a list of independent third 
                parties compiled by the Director for such 
                purpose, a party to hear such appeal. Within 90 
                days after filing of the request for the 
                appeal, such third party shall review the 
                determination of the Director and shall set 
                aside such determination if the third party 
                determines that the grounds under subparagraph 
                (A) exist. During the pendency of an appeal 
                under this paragraph, the Director shall stay 
                the applicability of the rates established 
                pursuant to paragraph (1).
                  (C) Effect of final determination.--In an 
                appeal under this paragraph--
                          (i) if a final determination is made 
                        that the grounds under subparagraph (A) 
                        exist, the third party hearing such 
                        appeal shall make a determination of 
                        how much to reduce the chargeable risk 
                        premium rate for flood insurance 
                        coverage for the property involved in 
                        the appeal from the amount required 
                        under paragraph (1) and the Director 
                        shall promptly reduce the chargeable 
                        risk premium rate for such property by 
                        such amount; and
                          (ii) if a final determination is made 
                        that the grounds under subparagraph (A) 
                        do not exist, the Director shall 
                        promptly increase the chargeable risk 
                        premium rate for such property to the 
                        amount established pursuant to 
                        paragraph (1) 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 Mitigation 
                        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 Two Floods and 
                You Are Out of the Taxpayers' Pocket Act of 
                2003, the Director shall submit a report to the 
                House of Representatives and the Senate 
                describing the rules, procedures, and 
                administration for appeals under this 
                paragraph, which shall be submitted together 
                with the report required under section 
                1362(g)(2)(E).
  [(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 
        having 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).]
  (k) 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 repetitive 
claims property, the Director may--
          (1) cancel the policy and deny the provision to such 
        policyholder of any new flood insurance coverage under 
        this title for the property; or
          (2) refuse to renew the policy with such policyholder 
        upon expiration and deny the provision of any new flood 
        insurance coverage under this title to such 
        policyholder for the property.
  [(j)] (l) Reports.--Not later than 1 year after the date of 
enactment of the Riegle Community Development and Regulatory 
Improvement 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.
  (m) Coordination With States and Communities.--The Director 
shall, in consultation and coordination with States and 
communities:
          (1) Identification of repetitive claims properties.--
        Identify repetitive claims properties and properties at 
        risk of becoming repetitive claims properties.
          (2) Management of 100-year floodplain.--Take such 
        actions as are appropriate to encourage and improve 
        participation of owners of properties that are not 
        located in areas having special flood hazards but are 
        located within the 100-year floodplain.
  (n) Definitions.--For purposes of this section:
          (1) Community.--The term ``community'' means--
                  (A) a political subdivision that--
                          (i) has zoning and building code 
                        jurisdiction over a particular area 
                        having special flood hazards; and
                          (ii) is participating in the national 
                        flood insurance program; or
                  (B) a political subdivision of a State, or 
                other authority, that is designated to develop 
                and administer a mitigation plan and manage 
                projects by political subdivisions, all of 
                which meet the requirements of subparagraph 
                (A).
          (2) Repetitive claims property.--The term 
        ``repetitive claims property'' means, without regard to 
        the ownership of the property, a property with respect 
        to which claim payments for losses have been made--
                  (A) under flood insurance coverage under this 
                title,
                  (B) on more than one occasion within a 10-
                year period, and
                  (C) for which the cumulative value of the 
                amount by which such claims exceed the amount 
                of any applicable deductible under such 
                coverage is $5,000 or more,
        The Director may, by regulation, further define subsets 
        of repetitive claims properties for purposes of 
        subsection (e)(4).

                     NATIONAL FLOOD MITIGATION FUND

  Sec. 1367. (a)  * * *

           *       *       *       *       *       *       *

  (b) Credits.--The National Flood Mitigation Fund shall be 
credited with--
          [(1) amounts from the National Flood Insurance Fund, 
        in amounts not exceeding--
                  [(A) $10,000,000 in the fiscal year ending 
                September 30, 1994;
                  [(B) $15,000,000 in the fiscal year ending 
                September 30, 1995;
                  [(C) $20,000,000 in the fiscal year ending 
                September 30, 1996; and
                  [(D) $20,000,000 in each fiscal year 
                thereafter;]
          (1) in each fiscal year, amounts from the National 
        Flood Insurance Fund not exceeding $20,000,000;
          (2) in each of fiscal years 2004, 2005, 2006, 2007, 
        and 2008, in addition to amounts under paragraph (1), 
        amounts from the National Flood Insurance Fund not 
        exceeding $40,000,000, to remain available until 
        expended, except that--
                  (A) such amounts shall be used only under 
                section 1366 for mitigation activities for 
                repetitive claims properties (as such term is 
                defined in section 1366(n)); and
                  (B) 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; 
                and
          [(2)] (3) any penalties collected under section 
        102(f) of the Flood Disaster Protection Act of 1973; 
        and
          [(3)] (4) any amounts recaptured under section 
        1366(i).

           *       *       *       *       *       *       *


CHAPTER IV--APPROPRIATIONS AND MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *


                             APPROPRIATIONS

  Sec. 1376. (a)  * * *

           *       *       *       *       *       *       *

  (c) There are authorized to be appropriated such sums as may 
be necessary [through December 31, 2003, for studies under this 
title.] through the date specified in section 1319, for studies 
under this title.

           *       *       *       *       *       *       *

                              ----------                              


SECTION 582 OF THE NATIONAL FLOOD INSURANCE REFORM ACT OF 1994

           *       *       *       *       *       *       *


SEC. 582. PROHIBITED FLOOD DISASTER ASSISTANCE.

  (a)  * * *

           *       *       *       *       *       *       *

  (d) Unmitigated Repetitive Insurance Claims Properties.--
Notwithstanding any other provision of law, no Federal disaster 
relief assistance made available in a flood disaster area may 
be used to make a payment (including any loan assistance 
payment) for repair, replacement, or restoration for damage to 
a property located in such area if--
          (1) such property is a repetitive claims property (as 
        such term is defined in section 1366(n) of the National 
        Flood Insurance Act of 1968 (42 U.S.C. 4104c(o)) or a 
        severe repetitive loss property (as such term is 
        defined in section 1362(b) of such Act (42 U.S.C. 
        4103(b)); and
          (2) in accordance with such requirements as the 
        Director may establish, mitigation assistance under 
        section 1362 or 1366 of the National Flood Insurance 
        Act of 1968 has been offered to the owner of the 
        property, before or after the occurrence of the flood 
        loss events, which was refused by the owner.
  [(d)] (e) Definition.--For purposes of this section, the term 
``flood disaster area'' means an area with respect to which--
          (1)  * * *

           *       *       *       *       *       *       *

  [(e)] (f) Effective Date.--This section and the amendments 
made by this section shall apply to disasters declared after 
the date of enactment of this Act.

           *       *       *       *       *       *       *


                                
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