[House Report 109-370]
[From the U.S. Government Publishing Office]



109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     109-370

======================================================================
 
NATIONAL FLOOD INSURANCE PROGRAM COMMITMENT TO POLICYHOLDERS AND REFORM 
                              ACT OF 2005

                                _______
                                

February 1, 2006.--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

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 4320]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 4320) to restore the financial solvency of the 
national flood insurance program, and for other purposes, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     5
Background and Need for Legislation..............................     5
Hearings.........................................................     7
Committee Consideration..........................................     7
Committee Votes..................................................     7
Committee Oversight Findings.....................................     9
Performance Goals and Objectives.................................     9
New Budget Authority, Entitlement Authority, and Tax Expenditures     9
Committee Cost Estimate..........................................     9
Congressional Budget Office Estimate.............................     9
Federal Mandates Statement.......................................     9
Advisory Committee Statement.....................................     9
Constitutional Authority Statement...............................     9
Applicability to Legislative Branch..............................    10
Section-by-Section Analysis......................................    10
Exchange of Committee Correspondence.............................    13
Changes in Existing Law Made by the Bill, as Reported............    15
Additional Views.................................................    19

                               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 ``National Flood Insurance Program 
Commitment to Policyholders and Reform Act of 2005''.

SEC. 2. FINDINGS AND PURPOSES.

  (a) Findings.--The Congress finds that--
          (1) the amount of the flood insurance claims resulting from 
        Hurricane Katrina and Hurricane Rita will likely exceed the 
        aggregate amount of all claims previously paid in the history 
        of the national flood insurance program, and will require an 
        increase in the program's borrowing authority;
          (2) flood insurance policyholders have a legitimate 
        expectation that they will receive fair and timely compensation 
        for losses covered under their policies;
          (3) substantial flooding has occurred, and will likely occur 
        again, outside of the areas designated as the 100-year 
        floodplain;
          (4) to adequately and correctly assess potential flood damage 
        and losses in all areas of the United States, the national 
        flood insurance program will need to update its flood maps with 
        the latest technology;
          (5) the maximum coverage limits for flood insurance policies 
        should be increased to reflect inflation and the increased cost 
        of housing;
          (6) significant reforms to the national flood insurance 
        program required in the Bunning-Bereuter-Blumenauer Flood 
        Insurance Reform Act of 2004 have yet to be implemented; and
          (7) despite reforms required in the Bunning-Bereuter-
        Blumenauer Flood Insurance Reform Act of 2004, the national 
        flood insurance program requires a modernized and updated 
        administrative model to ensure that the people of the United 
        States have continued access to flood insurance.
  (b) Purposes.--The purposes of this Act are--
          (1) to protect the integrity of the national flood insurance 
        program by fully funding existing legal obligations expected by 
        existing policyholders who have paid policy premiums in return 
        for flood insurance coverage;
          (2) to increase incentives for homeowners and communities to 
        participate in the national flood insurance program and to 
        improve oversight to ensure full participation in the program 
        for owners of properties for which such participation is 
        mandatory;
          (3) to increase awareness of homeowners of flood risks and 
        improve the quality of information regarding such risks 
        provided to homeowners; and
          (4) to better mitigate future flood damage risks through a 
        combination of enhanced protective measures, property 
        elevation, and buyouts of flood-prone properties.

SEC. 3. STUDY REGARDING MANDATORY PURCHASE REQUIREMENT FOR 500-YEAR 
                    FLOODPLAIN AND REPORTS REGARDING FLOOD MAP 
                    MODERNIZATION.

  (a) Study Regarding Mandatory Purchase Requirement for 500-Year 
Floodplain.--
          (1) In general.--The Comptroller General of the United States 
        shall conduct a study regarding the impact, effectiveness, and 
        feasibility of amending the provisions of the Flood Disaster 
        Protection Act of 1973 regarding the properties that are 
        subject to the mandatory flood insurance coverage purchase 
        requirements under such Act to extend such requirements to all 
        properties located in the 500-year floodplain.
          (2) Issues.--The study under this subsection shall assess--
                  (A) the regulatory, financial and economic impacts of 
                extending such requirements on the costs of 
                homeownership, the actuarial soundness of the national 
                flood insurance program, the Federal Emergency 
                Management Agency, local communities, insurance 
                companies, and local land use;
                  (B) the effectiveness of extending such requirements 
                in protecting homeowners from financial loss and in 
                protecting the financial soundness of the national 
                flood insurance program, and the effectiveness of 
                extending such requirements in comparison with 
                providing for more effective enforcement of existing 
                mandatory flood insurance purchase requirements;
                  (C) the feasibility of extending such requirements 
                taking into consideration the need for identifying and 
                mapping the 500-year floodplain;
                  (D) any liability on the part of lenders to comply 
                with or enforce such extended requirements;
                  (E) any burdens on building officials and flood plain 
                managers to implement such requirements in the expanded 
                area;
                  (F) any increased burden on the Federal Emergency 
                Management Agency to make determinations on exemptions 
                to the floodplain and approval of local decisions;
                  (G) the effects of extending such requirements on 
                existing policy holders of flood insurance coverage for 
                properties located in the 100-year floodplain, 
                including the effects on continued compliance and 
                premium rates; and
                  (H) the effects of extending such requirements on the 
                ability of homeowners to make renovations to their 
                homes.
          (3) Report.--The Comptroller General shall submit a report to 
        the Congress regarding the results and conclusions of the study 
        under this subsection not later than the expiration of the 6-
        month period beginning on the date of the enactment of this 
        Act.
  (b) Annual Flood Map Modernization Reports and Certification of 
Completion.--
          (1) In general.--During the period that ends upon the 
        completion by the Director of the Federal Emergency Management 
        Agency of the updating and modernization of all floodplain 
        areas and flood-risk zones, the Director shall submit a report 
        annually to the Congress describing the extent to which such 
        updating and modernization has been completed. Upon the 
        completion of such updating, the Director shall submit to the 
        Congress, and cause to be published in the Federal Register, a 
        report certifying such completion.
          (2) Timing.--The first report under this subsection shall be 
        submitted not later than June 30, 2006, and successive reports 
        required under this subsection during the period referred to in 
        paragraph (1) shall be submitted not later than June 30 of each 
        year during such period.

SEC. 4. ENFORCEMENT.

  Paragraph (5) of section 102(f) of the Flood Disaster Protection Act 
of 1973 (42 U.S.C. 4012(a)) is amended--
          (1) by striking ``$350'' and inserting ``$2,000''; and
          (2) by striking the last sentence.

SEC. 5. REITERATION OF FEMA RESPONSIBILITIES UNDER 2004 REFORM ACT.

  (a) Appeals Process.--As directed in section 205 of the Bunning-
Bereuter-Blumenauer Flood Insurance Reform Act of 2004 (42 U.S.C. 4011 
note), the Director of the Federal Emergency Management Agency is again 
directed to, not later than 90 days after the date of the enactment of 
this Act, establish an appeals process through which holders of a flood 
insurance policy may appeal the decisions, with respect to claims, 
proofs of loss, and loss estimates relating to such flood insurance 
policy as required by such section.
  (b) Minimum Training and Education Requirements.--The Director of the 
Federal Emergency Management Agency is directed to enforce the minimum 
training and education requirements for all insurance agents who sell 
flood insurance policies that have been established under the notice 
published September 1, 2005 (70 Fed. Reg. 52117) pursuant to section 
207 of the Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 
2004 (42 U.S.C. 4011 note).
  (c) Mitigation Programs.--Not later than the expiration of the 30-day 
period beginning on the date of the enactment of this Act, the Director 
of the Federal Emergency Management Agency shall issue regulations 
necessary to implement the amendments made by sections 102, 103, 104, 
and 105 of the Bunning-Bereuter-Blumenauer Flood Insurance Reform Act 
of 2004 (118 Stat. 714 et seq.).
  (d) Report.--Not later than the expiration of the 6-month period 
beginning on the date of the enactment of this Act, the Director of the 
Federal Emergency Management Agency shall submit a report to the 
Congress describing the implementation of each provision of the 
Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004 (Public 
Law 108-264) and identifying each regulation, order, notice, and other 
material issued by the Director in implementing each such provision.

SEC. 6. MAXIMUM COVERAGE LIMITS.

  Subsection (b) of section 1306 of the National Flood Insurance Act of 
1968 (42 U.S.C. 4013(b)) is amended--
          (1) in paragraph (2), by striking ``$250,000'' and inserting 
        ``$335,500'';
          (2) in paragraph (3), by striking ``$100,000'' and inserting 
        ``$135,000''; and
          (3) in paragraph (4), by striking ``$500,000'' each place 
        such term appears and inserting ``$670,700''.

SEC. 7. COVERAGE FOR ADDITIONAL LIVING EXPENSES AND BUSINESS 
                    INTERRUPTION.

  Subsection (b) of section 1306 of the National Flood Insurance Act of 
1968 (42 U.S.C. 4013) is amended--
          (1) in paragraph (4), by striking ``and'' at the end;
          (2) in paragraph (5), by striking the period at the end and 
        inserting a semicolon; and
          (3) by adding at the end the following new paragraphs:
          ``(6) in the case of any residential property, each renewal 
        or new contract for flood insurance coverage shall provide not 
        less than $1,000 aggregate liability per dwelling unit for any 
        necessary increases in living expenses incurred by the insured 
        when losses from a flood make the residence unfit to live in, 
        which coverage shall be available only at chargeable rates that 
        are not less than the estimated premium rates for such coverage 
        determined in accordance with section 1307(a)(1);
          ``(7) in the case of any residential property, coverage for 
        additional living expenses described in paragraph (6) shall be 
        made available to every insured upon renewal and every 
        applicant in excess of the limits provided in paragraph (6) in 
        such amounts and at such rates as the Director shall establish, 
        except that such chargeable rates shall not be less than the 
        estimated premium rates for such coverage determined in 
        accordance with section 1307(a)(1); and
          ``(8) in the case of any commercial property, optional 
        coverage for losses resulting from any partial or total 
        interruption of the insured's business caused by damage to, or 
        loss of, such property from a flood shall be made available to 
        every insured upon renewal and every applicant, except that--
                  ``(A) for purposes of such coverage, losses shall be 
                determined based on the profits the covered business 
                would have earned, based on previous financial records, 
                had the flood not occurred; and
                  ``(B) such coverage shall be made available only at 
                chargeable rates that are not less than the estimated 
                premium rates for such coverage determined in 
                accordance with section 1307(a)(1).''.

SEC. 8. INCREASE IN BORROWING AUTHORITY.

  (a) Borrowing Authority.--The first sentence of subsection (a) of 
section 1309 of the National Flood Insurance Act of 1968 (42 U.S.C. 
4016(a)), as amended by the National Flood Insurance Program Enhanced 
Borrowing Authority Act of 2005 (Public Law 109-65; 119 Stat. 1998), is 
amended by striking ``$3,500,000,000'' and inserting 
``$22,000,000,000''.
  (b) FEMA Report.--Not later than the expiration of the 6-month period 
beginning on the date of the enactment of this Act, the Director of the 
Federal Emergency Management Agency shall submit a report to the 
Congress setting forth a plan for repaying any amounts borrowed 
pursuant to increase in borrowing authority authorized under the 
amendments made by subsection (a).

SEC. 9. CLARIFICATION OF REPLACEMENT COST PROVISIONS, FORMS, AND POLICY 
                    LANGUAGE.

  Not later than the expiration of the 3-month period beginning on the 
date of the enactment of this Act, the Director of the Federal 
Emergency Management Agency shall--
          (1) issue regulations, and revise any materials made 
        available by such Agency, to clarify the applicability of 
        replacement cost coverage under the national flood insurance 
        program;
          (2) revise any regulations, forms, notices, guidance, and 
        publications relating to the full cost of repair or replacement 
        under the replacement cost coverage to more clearly describe 
        such coverage to flood insurance policyholders and information 
        to be provided by such policyholders relating to such coverage, 
        and to avoid providing misleading information to such 
        policyholders; and
          (3) revise the language in standard flood insurance policies 
        under such program regarding rating and coverage descriptions 
        in a manner that is consistent with language used widely in 
        other homeowners and property and casualty insurance policies, 
        including such language regarding classification of buildings, 
        basements, crawl spaces, detached garages, enclosures below 
        elevated buildings, and replacement costs.

SEC. 10. FEMA REPORTS ON FINANCIAL STATUS OF INSURANCE PROGRAM.

  Section 1320 of the National Flood Insurance Act of 1968 (42 U.S.C. 
4027) is amended--
          (1) in the section heading, by striking ``REPORT TO THE 
        PRESIDENT'' and inserting ``REPORTS'';
          (2) in subsection (a), by striking ``In General'' and 
        inserting ``Biennial Report to President''; and
          (3) by adding at the end the following new subsection:
  ``(c) Semiannual Reports to Congress on Financial Status.--Not later 
than June 30 and December 31 of each year, the Director shall submit a 
report to the Congress regarding the financial status of the national 
flood insurance program under this title. Each such report shall 
describe the financial status of the National Flood Insurance Fund and 
current and projected levels of claims, premium receipts, expenses, and 
borrowing under the program.''.

SEC. 11. NOTICE OF AVAILABILITY OF FLOOD INSURANCE IN RESPA GOOD FAITH 
                    ESTIMATE.

  Subsection (c) of section 5 of the Real Estate Settlement Procedures 
Act of 1974 (12 U.S.C. 2604(c)) is amended by adding at the end the 
following new sentence: ``Each such good faith estimate shall include a 
conspicuous statement that flood insurance coverage for residential 
real estate is generally available under the National Flood Insurance 
Program whether or not the real estate is located in an area having 
special flood hazards and that, to obtain such coverage, a home owner 
or purchaser should contact a hazard insurance provider.''.

SEC. 12. ELIGIBILITY OF PROPERTY DEMOLITION AND REBUILDING FOR 
                    MITIGATION ASSISTANCE PROGRAM.

  Subparagraph (B) of section 1366(e)(5) of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4104c(e)(5)(B)) is amended by 
inserting before the semicolon at the end the following: ``, or the 
demolition and rebuilding of structures located in such areas to at 
least Base Flood Elevation or any higher elevation required by any 
local ordinance''.

SEC. 13. AUTHORIZATION OF ADDITIONAL FEMA STAFF.

  Notwithstanding any other provision of law, the Director of the 
Federal Emergency Management Agency may employ such additional staff of 
such Agency as may be necessary to carry out all of the 
responsibilities of the Director pursuant to this Act and the 
amendments made by this Act. There are authorized to be appropriated to 
Director such sums as may be necessary for costs of employing such 
additional staff.

                          Purpose and Summary

    To restore the financial solvency of the National Flood 
Insurance Program and to increase the accountability of the 
Federal Emergency Management Agency with respect to its 
administration of the program.
    The National Flood Insurance Program Commitment to 
Policyholders and Reform Act of 2005 increases the borrowing 
authority for the National Flood Insurance Program to $22 
billion to help cover its contractual obligations to flood 
insurance policyholders, directs the Federal Emergency 
Management Agency to institute reforms in the program, 
increases the penalties for failure to enforce mandatory flood 
policy purchase requirements, and requires a study on mandatory 
flood insurance for mortgaged homes in the 500-year floodplain.

                  Background and Need for Legislation

    Since 1986, the NFIP has been financially self-supporting 
for the average historical loss year. Consistent with statute, 
the NFIP borrowed from the U.S. Treasury during those years in 
which the nation experienced unusually high flood losses. These 
loans were repaid to the Treasury, with interest, from 
policyholder premiums and related fees.
    National Flood Insurance Program claims liabilities arising 
from Hurricanes Katrina and Rita are estimated at between $20 
and $30 billion, far surpassing the total claims paid in the 
entire history of the NFIP. On September 20, 2005, the 
President signed into law the National Flood Insurance Enhanced 
Borrowing Authority Act of 2005 (PL 109-65), which authorized 
the NFIP temporarily to borrow up to $3.5 billion from the U.S. 
Treasury to pay claims. These additional funds were requested 
by FEMA and have since been exhausted as of November 7, 2005.
    Representative Michael Fitzpatrick (PA) introduced H.R. 
4133, the ``National Flood Insurance Program Further Enhanced 
Borrowing Authority Act of 2005'' on October 25, 2005. This 
legislation, which was marked up in Committee on October 26, 
would temporarily increase FEMA's borrowing authority to pay 
flood claims by $5 billion. According to FEMA, the increased 
borrowing authority should provide sufficient funds to cover 
claims through late November. H.R. 4133 passed the House under 
suspension of the rules on Wednesday, November 16. Until the 
Senate passes a similar borrowing authority increase, FEMA has 
advised those insurance companies participating in the NFIP 
``Write-Your-Own'' program (companies that sell flood policies 
on FEMA's behalf) that due to the absence of borrowing 
authority, the companies should stop processing claims.
    FEMA is legally obligated to pay claims arising from flood 
events where policies are in place. Should the NFIP run out of 
money needed to pay the estimated 225,000 Katrina and Rita-
related claims, homeowners whose claims are not paid could 
initiate legal action against FEMA and the U.S. Government.
    H.R. 4320 increases the NFIP's borrowing authority to $22 
billion and mandates numerous program reforms. Some of these 
reforms, found in the Bunning-Bereuter-Blumenauer Flood 
Insurance Reform Act of 2004, have yet to be implemented over a 
year after this legislation was signed into law. These include 
certain provisions for flood mitigation efforts for repeatedly-
flooded properties and establishment of an appeals process 
through which holders of a flood insurance policy could appeal 
decisions with respect to claims and proof of loss.
    H.R. 4320 further directs FEMA to continue to work with the 
insurance industry, state insurance regulators, and other 
interested parties to implement the minimum training and 
education standards for all insurance agents who sell flood 
insurance policies that FEMA established under the notice 
published September 1, 2005 (70 Fed. Reg. 52117) pursuant to 
section 207 of the Bunning-Bereuter-Blumenauer Flood Insurance 
Reform Act of 2004 (42 U.S.C. 4011 note).
    In addition, H.R. 4320 requires a study of mandatory flood 
insurance purchase requirement for those people with a 
federally-backed mortgage who live in the 500-year floodplain; 
increases the fine for lenders who do not enforce the mandatory 
purchase requirement; increases for inflation the coverage 
limits for flood insurance policies; allows FEMA to offer 
coverage for living expenses and business interruption; and 
allows FEMA to provide funding through its mitigation 
assistance program for demolition and rebuilding of structures 
in the floodplain to higher elevations.
    Additional provisions of the bill intended to increase 
accountability include a requirement that FEMA issue 
regulations and revise materials to clarify policy language to 
guard against misinterpretations by policyholders, report to 
Congress on the financial status of the NFIP twice a year, 
report on flood map modernization efforts once a year, and 
report on the Agency's plan for repaying funds borrowed under 
the authority granted by this legislation; and a requirement 
that lenders provide notice to home buyers that flood insurance 
is available to all homeowners, not just those in a designated 
floodplain.

                                Hearings

    No hearings were held on this legislation.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
November 16, 2005, and ordered H.R. 4320, National Flood 
Insurance Program Commitment to Policyholders and Reform Act of 
2005, favorably reported to the House as amended 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. 
During the considerationof the bill, the following record votes 
were taken. The names of Members voting for and against follow:
    An amendment offered by Mr. Gary G. Miller of California, 
No. 3a, regarding the mandatory purchase requirement, as a 
substitute for the amendment offered by Mr. Baker, No. 3, 
regarding the mandatory purchase requirement, was AGREED TO by 
a record vote of 34 yeas and 31 nays (Record vote no. FC-6).

                                              RECORD VOTE NO. FC-6
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........  Mr. Frank (MA)...  ........        X   .........
Mr. Leach......................  ........        X   .........  Mr. Kanjorski....        X   ........  .........
Mr. Baker......................  ........        X   .........  Ms. Waters.......  ........        X   .........
Ms. Pryce (OH).................        X   ........  .........  Mr. Sanders......        X   ........  .........
Mr. Bachus.....................  ........        X   .........  Mrs. Maloney.....        X   ........  .........
Mr. Castle.....................        X   ........  .........  Mr. Gutierrez....  ........        X   .........
Mr. King (NY)..................  ........  ........  .........  Ms. Velazquez....        X   ........  .........
Mr. Royce......................        X   ........  .........  Mr. Watt.........  ........        X   .........
Mr. Lucas......................        X   ........  .........  Mr. Ackerman.....  ........  ........  .........
Mr. Ney........................        X   ........  .........  Ms. Hooley.......  ........        X   .........
Mrs. Kelly.....................        X   ........  .........  Ms. Carson.......  ........        X   .........
Mr. Paul.......................        X   ........  .........  Mr. Sherman......        X   ........  .........
Mr. Gillmor....................  ........        X   .........  Mr. Meeks (NY)...  ........        X   .........
Mr. Ryun (KS)..................  ........        X   .........  Ms. Lee..........  ........        X   .........
Mr. LaTourette.................        X   ........  .........  Mr. Moore (KS)...  ........        X   .........
Mr. Manzullo...................        X   ........  .........  Mr. Capuano......  ........        X   .........
Mr. Jones (NC).................        X   ........  .........  Mr. Ford.........  ........        X   .........
Mrs. Biggert...................  ........        X   .........  Mr. Hinojosa.....        X   ........  .........
Mr. Shays......................  ........        X   .........  Mr. Crowley......        X   ........  .........
Mr. Fossella...................        X   ........  .........  Mr. Clay.........  ........        X   .........
Mr. Gary G. Miller (CA)........        X   ........  .........  Mr. Israel.......        X   ........  .........
Mr. Tiberi.....................        X   ........  .........  Mrs. McCarthy....        X   ........  .........
Mr. Kennedy (MN)...............        X   ........  .........  Mr. Baca.........        X   ........  .........
Mr. Feeney.....................  ........        X   .........  Mr. Matheson.....        X   ........  .........
Mr. Hensarling.................  ........        X   .........  Mr. Lynch........  ........        X   .........
Mr. Garrett (NJ)...............        X   ........  .........  Mr. Miller (NC)..  ........        X   .........
Ms. Brown-Waite (FL)...........  ........  ........  .........  Mr. Scott (GA)...  ........        X   .........
Mr. Barrett (SC)...............  ........        X   .........  Mr. Davis (AL)...  ........        X   .........
Ms. Harris.....................  ........  ........  .........  Mr. Al Green (TX)  ........        X   .........
Mr. Renzi......................        X   ........  .........  Mr. Cleaver......  ........        X   .........
Mr. Gerlach....................        X   ........  .........  Ms. Bean.........  ........        X   .........
Mr. Pearce.....................  ........  ........  .........  Ms. Wasserman      ........        X   .........
                                                                 Schultz.
Mr. Neugebauer.................        X   ........  .........  Ms. Moore (WI)...        X   ........  .........
Mr. Price (GA).................        X   ........  .........
Mr. Fitzpatrick (PA)...........        X   ........  .........
Mr. Davis (KY).................        X   ........  .........
Mr. McHenry....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------
* Mr. Sanders is an independent, but caucuses with the Democratic Caucus.

    An amendment (as modified) offered by Mr. Watt, No. 4, 
regarding temporary flood insurance buy-in, was NOT AGREED TO 
by a record vote of 32 yeas and 34 nays (Record vote no. FC-7).

                                              RECORD VOTE NO. FC-7
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........  Mr. Frank (MA)...        X   ........  .........
Mr. Leach......................  ........        X   .........  Mr. Kanjorski....  ........        X   .........
Mr. Baker......................  ........        X   .........  Ms. Waters.......        X   ........  .........
Ms. Pryce (OH).................  ........        X   .........  Mr. Sanders......        X   ........  .........
Mr. Bachus.....................  ........        X   .........  Mrs. Maloney.....        X   ........  .........
Mr. Castle.....................  ........        X   .........  Mr. Gutierrez....        X   ........  .........
Mr. King (NY)..................  ........  ........  .........  Ms. Velazquez....        X   ........  .........
Mr. Royce......................  ........        X   .........  Mr. Watt.........        X   ........  .........
Mr. Lucas......................  ........        X   .........  Mr. Ackerman.....        X   ........  .........
Mr. Ney........................  ........        X   .........  Ms. Hooley.......        X   ........  .........
Mrs. Kelly.....................  ........        X   .........  Ms. Carson.......        X   ........  .........
Mr. Paul.......................  ........        X   .........  Mr. Sherman......        X   ........  .........
Mr. Gillmor....................  ........        X   .........  Mr. Meeks (NY)...        X   ........  .........
Mr. Ryun (KS)..................  ........        X   .........  Ms. Lee..........        X   ........  .........
Mr. LaTourette.................  ........        X   .........  Mr. Moore (KS)...        X   ........  .........
Mr. Manzullo...................  ........        X   .........  Mr. Capuano......        X   ........  .........
Mr. Jones (NC).................  ........        X   .........  Mr. Ford.........        X   ........  .........
Mrs. Biggert...................  ........        X   .........  Mr. Hinojosa.....        X   ........  .........
Mr. Shays......................  ........        X   .........  Mr. Crowley......        X   ........  .........
Mr. Fossella...................  ........        X   .........  Mr. Clay.........        X   ........  .........
Mr. Gary G. Miller (CA)........  ........        X   .........  Mr. Israel.......        X   ........  .........
Mr. Tiberi.....................  ........        X   .........  Mrs. McCarthy....        X   ........  .........
Mr. Kennedy (MN)...............  ........        X   .........  Mr. Baca.........        X   ........  .........
Mr. Feeney.....................  ........        X   .........  Mr. Matheson.....        X   ........  .........
Mr. Hensarling.................  ........        X   .........  Mr. Lynch........        X   ........  .........
Mr. Garrett (NJ)...............  ........        X   .........  Mr. Miller (NC)..        X   ........  .........
Ms. Brown-Waite (FL)...........  ........  ........  .........  Mr. Scott (GA)...        X   ........  .........
Mr. Barrett (SC)...............  ........        X   .........  Mr. Davis (AL)...        X   ........  .........
Ms. Harris.....................  ........        X   .........  Mr. Al Green (TX)        X   ........  .........
Mr. Renzi......................  ........        X   .........  Mr. Cleaver......        X   ........  .........
Mr. Gerlach....................  ........        X   .........  Ms. Bean.........        X   ........  .........
Mr. Pearce.....................  ........  ........  .........  Ms. Wasserman            X   ........  .........
                                                                 Schultz.
Mr. Neugebauer.................  ........        X   .........  Ms. Moore (WI)...        X   ........  .........
Mr. Price (GA).................  ........        X   .........
Mr. Fitzpatrick (PA)...........  ........        X   .........
Mr. Davis (KY).................  ........        X   .........
Mr. McHenry....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------
* Mr. Sanders is an independent, but caucuses with the Democratic Caucus.

    The following other amendments were also considered by the 
Committee:
    An amendment offered by Mr. Oxley, No. 1, making various 
substantive and technical changes to the bill, was AGREED TO, 
by a voice vote.
    An amendment offered by Mr. Frank, No. 2, regarding 
additional FEMA staff, was AGREED TO, by a voice vote.
    An amendment offered by Mr. Baker, No. 3, regarding the 
mandatory purchase requirement, as amended by the substitute 
amendment offered by Mr. Gary G. Miller of California, No. 3a, 
regarding the mandatory purchase requirement, was AGREED TO, by 
a voice vote.
    A motion by Mr. Oxley to report the bill, as amended, to 
the House with a favorable recommendation 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 has held oversight 
hearings and 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 goal of H.R. 4320 is to restore the financial solvency 
of the National Flood Insurance Program and to increase the 
accountability of the Federal Emergency Management Agency with 
respect to its administration of the program.

   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 estimates of new 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, when received.

                        Committee Cost Estimate

    The Committee will adopt 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, when received.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the cost estimate to be provided by 
the Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974 was not received in time to be 
filed with this report.

                       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 
general welfare of the United States) and clause 3 (relating to 
the power to regulate 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 
``National Flood Insurance Program Commitment to Policyholders 
and Reform Act of 2005.''

Section 2. Findings and purposes

    This section sets forth certain findings regarding the need 
for reform of and increased borrowing authority for the 
National Flood Insurance Program. This section also establishes 
the purposes of the Act.

Section 3. Study regarding mandatory purchase requirement for 500-year 
        floodplain and reports regarding flood map modernization

    This section requires the Comptroller General of the United 
States to conduct a study on the effects of extending mandatory 
flood insurance purchase requirements to all properties located 
in the 500-year floodplain, to be submitted to the Congress no 
later than 6 months from the enactment of this Act.

Section 4. Enforcement

    This section amends paragraph (5) of section 102(f) of the 
Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a) by 
increasing to $2,000 the fine levied against federally-
regulated lending institutions for each failure to enforce 
mandatory flood insurance purchase requirements and removing 
the $100,000 per year per institution cap on such fines.

Section 5. Reiteration of FEMA responsibilities under 2004 Reform Act

    This section reiterates FEMA's responsibility to implement 
provisions of the Bunning-Bereuter-Blumenauer Flood Insurance 
Reform Act of 2004 (P.L. 108-264) and directs FEMA to continue 
to work with the insurance industry, state insurance 
regulators, and other interested parties to implement the 
minimum training and education standards for all insurance 
agents who sell flood insurance policies that FEMA established 
under the notice published September 1, 2005 (70 Fed. Reg. 
52117) pursuant to section 207 of the Bunning-Bereuter-
Blumenauer Flood Insurance Reform Act of 2004 (42 U.S.C. 4011 
note). This section also mandates that FEMA submit a report to 
Congress on implementation of each provision of P.L. 108-264 no 
later than 6 months after the enactment of this Act.

Section 6. Maximum coverage limits

    This section amends subsection (b) of section 1306 of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4013(b)) by 
increasing the maximum coverage limits for flood insurance 
policies to reflect inflation. New coverage limits would be 
$335,500 for residences; $135,000 for residential contents; and 
$670,700 for businesses and churches.

Section 7. Coverage for additional living expenses and business 
        interruption

    This section amends subsection (b) of section 1306 of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4013) by 
requiring FEMA to include in each renewal or new contract for 
flood insurance at least $1,000 for living expenses following a 
flood event and requiring FEMA to provide actuarially-priced, 
optional business interruption coverage for flood losses.

Section 8. Increase in borrowing authority

    This section amends subsection (a) of section 1309 of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4016(a)), as 
amended by the National Flood Insurance Program Enhanced 
Borrowing Authority Act of 2005 (P.L. 109-65; 119 Stat. 1998), 
by increasing the National Flood Insurance Program's borrowing 
authority to $22 billion. This section also requires that FEMA 
submit a report to Congress, not later than 6 months after 
enactment of this legislation, on how it intends to repay funds 
borrowed under this increased authority.

Section 9. Clarification of replacement cost provisions, forms, and 
        policy language

    This section directs FEMA to issue regulations and revise 
materials that it makes available through the NFIP to clarify 
the applicability of replacement cost coverage under the 
national flood insurance program.

Section 10. FEMA reports on financial status of insurance program

    This section amends section 1320 of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4027) by requiring a 
semiannual report to Congress on the financial status of the 
national flood insurance program.

Section 11. Notice of availability of flood insurance in RESPA good 
        faith estimate

    This section amends subsection (c) of section 5 of the Real 
Estate Settlement Procedures Act of 1974 (12 U.S.C. 2604)) by 
requiring that each good faith estimate include a conspicuous 
statement that flood insurance coverage for residential real 
estate is generally available under the National Flood 
Insurance Program whether or not the real estate is located in 
an area having special flood hazards and that, to obtain such 
coverage, a home owner or purchaser should contact a hazard 
insurance provider.

Section 12. Eligibility of property demolition and rebuilding for 
        mitigation assistance program

    This section amends subparagraph (B) of section 1366(e)(5) 
of the National Flood Insurance Act of 1968 (42 U.S.C. 
4104(e)(5)(B)) by granting FEMA the authority to provide 
funding for flood mitigation activities that involve the 
demolition and rebuilding of structures to at least Base Flood 
Elevation or higher.

Section 13. Authorization of additional FEMA staff

    This section authorizes that such sums as necessary be 
appropriated for the Director of FEMA to employ additional 
staff necessary to carry out all of the responsibilities of the 
Director pursuant to this Act.


         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):

        SECTION 102 OF THE FLOOD DISASTER PROTECTION ACT OF 1973


    FLOOD INSURANCE PURCHASE AND COMPLIANCE REQUIREMENTS AND ESCROW 
                                ACCOUNTS

  Sec. 102. (a) * * *

           *       *       *       *       *       *       *

  (f) Civil Monetary Penalties for Failure To Require Flood 
Insurance or Notify.--
          (1) * * *

           *       *       *       *       *       *       *

          (5) Amount.--A civil monetary penalty under this 
        subsection may not exceed [$350] $2,000 for each 
        violation under paragraph (2) or paragraph (3). [The 
        total amount of penalties assessed under this 
        subsection against any single regulated lending 
        institution or enterprise during any calendar year may 
        not exceed $100,000.]

           *       *       *       *       *       *       *

                              ----------                              


                  NATIONAL FLOOD INSURANCE ACT OF 1968


                  TITLE XIII--NATIONAL FLOOD INSURANCE


                              SHORT TITLE

  Sec. 1301. This title may be cited as the ``National Flood 
Insurance Act of 1968''.

           *       *       *       *       *       *       *


              NATURE AND LIMITATION OF INSURANCE COVERAGE

  Sec. 1306. (a) * * *
  (b) In addition to any other terms and conditions under 
subsection (a), such regulations shall provide that--
          (1) * * *
          (2) in the case of any residential property for which 
        the risk premium rate is determined in accordance with 
        the provisions of section 1307(a)(1), additional flood 
        insurance in excess of the limits specified in clause 
        (i) of subparagraph (A) of paragraph (1) shall be made 
        available to every insured upon renewal and every 
        applicant of insurance so as to enable such insured or 
        applicant to receive coverage up to a total amount 
        (including such limits specified in paragraph 
        (1)(A)(i)) of [$250,000] $335,500;
          (3) in the case of any residential property for which 
        the risk premium rate is determined in accordance with 
        the provisions of section 1307(a)(1), additional flood 
        insurance in excess of the limits specified in clause 
        (ii) of subparagraph (A) of paragraph (1) shall be made 
        available to every insured upon renewal and every 
        applicant for insurance so as to enable any such 
        insured or applicant to receive coverage up to a total 
        amount (including such limits specified in paragraph 
        (1)(A)(ii)) of [$100,000] $135,000;
          (4) in the case of any nonresidential property, 
        including churches, for which the risk premium rate is 
        determined in accordance with the provisions of section 
        1307(a)(1), additional flood insurance in excess of the 
        limits specified in subparagraphs (B) and (C) of 
        paragraph (1) shall be made available to every insured 
        upon renewal and every applicant for insurance, in 
        respect to any single structure, up to a total amount 
        (including such limit specified in subparagraph (B) or 
        (C) of paragraph (1), as applicable) of [$500,000] 
        $670,700 for each structure and [$500,000] $670,700 for 
        any contents related to each structure; [and]
          (5) any flood insurance coverage which may be made 
        available in excess of the limits specified in 
        subparagraph (A), (B), or (C) of paragraph (1), shall 
        be based only on chargeable premium rates under section 
        1308 which are not less than the estimated premium 
        rates under section 1307(a)(1), and the amount of such 
        excess coverage shall not in any case exceed an amount 
        equal to the applicable limit so specified (or 
        allocated) under paragraph (1)(C), (2), (3), or (4), as 
        applicable[.];
          (6) in the case of any residential property, each 
        renewal or new contract for flood insurance coverage 
        shall provide not less than $1,000 aggregate liability 
        per dwelling unit for any necessary increases in living 
        expenses incurred by the insured when losses from a 
        flood make the residence unfit to live in, which 
        coverage shall be available only at chargeable rates 
        that are not less than the estimated premium rates for 
        such coverage determined in accordance with section 
        1307(a)(1);
          (7) in the case of any residential property, coverage 
        for additional living expenses described in paragraph 
        (6) shall be made available to every insured upon 
        renewal and every applicant in excess of the limits 
        provided in paragraph (6) in such amounts and at such 
        rates as the Director shall establish, except that such 
        chargeable rates shall not be less than the estimated 
        premium rates for such coverage determined in 
        accordance with section 1307(a)(1); and
          (8) in the case of any commercial property, optional 
        coverage for losses resulting from any partial or total 
        interruption of the insured's business caused by damage 
        to, or loss of, such property from a flood shall be 
        made available to every insured upon renewal and every 
        applicant, except that--
                  (A) for purposes of such coverage, losses 
                shall be determined based on the profits the 
                covered business would have earned, based on 
                previous financial records, had the flood not 
                occurred; and
                  (B) such coverage shall be made available 
                only at chargeable rates that are not less than 
                the estimated premium rates for such coverage 
                determined in accordance with section 
                1307(a)(1).

           *       *       *       *       *       *       *


                               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 the date 
specified in section 1319, and $1,000,000,000 thereafter; 
except that, through September 30, 2008, clause (2) of this 
sentence shall be applied by substituting ``[$3,500,000,000] 
$22,000,000,000'' for ``$1,500,000,000''. 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.

           *       *       *       *       *       *       *


                   [REPORT TO THE PRESIDENT] REPORTS

  Sec. 1320. (a) [In General] Biennial Report to President.--
The Director shall biennially submit a report of operations 
under this title to the President for submission to the 
Congress.

           *       *       *       *       *       *       *

  (c) Semiannual Reports to Congress on Financial Status.--Not 
later than June 30 and December 31 of each year, the Director 
shall submit a report to the Congress regarding the financial 
status of the national flood insurance program under this 
title. Each such report shall describe the financial status of 
the National Flood Insurance Fund and current and projected 
levels of claims, premium receipts, expenses, and borrowing 
under the program.

           *       *       *       *       *       *       *


                         MITIGATION ASSISTANCE

  Sec. 1366. (a) * * *

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

          (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) * * *
                  (B) elevation, relocation, demolition, or 
                floodproofing of structures (including public 
                structures) located in areas having special 
                flood hazards or other areas of flood risk, or 
                the demolition and rebuilding of structures 
                located in such areas to at least Base Flood 
                Elevation or any higher elevation required by 
                any local ordinance;

           *       *       *       *       *       *       *

                              ----------                              


     SECTION 5 OF THE REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

                      special information booklets

      Sec. 5. (a) * * *

           *       *       *       *       *       *       *

      (c) Each lender shall include with the booklet a good 
faith estimate of the amount or range of charges for specific 
settlement services the borrower is likely to incur in 
connection with the settlement as prescribed by the Secretary. 
Each such good faith estimate shall include a conspicuous 
statement that flood insurance coverage for residential real 
estate is generally available under the National Flood 
Insurance Program whether or not the real estate is located in 
an area having special flood hazards and that, to obtain such 
coverage, a home owner or purchaser should contact a hazard 
insurance provider.

           *       *       *       *       *       *       *


                 ADDITIONAL VIEWS OF HON. BRAD SHERMAN

    During the Committee's consideration of H.R. 4320, the 
Committee defeated by a roll call vote of 32 Ayes and 34 Nays 
an amendment offered by the Gentleman from North Carolina, Mr. 
Watt. I voted in favor of the amendment.
    Mr. Watt's amendment would have allowed property owners 
affected by Hurricane Katrina--who did not live in a floodplain 
and who did not have, nor were they required to have, flood 
insurance--to purchase retro-active coverage under the National 
Flood Insurance Program.
    I fully understand Mr. Watt's desire to implement 
meaningful relief legislation that could be implemented quickly 
to assist the victims of this devastating storm. I voted 
``yes,'' even knowing the amendment would fail. I did so to 
strengthen the hand of the Ranking Member, Mr. Frank, and 
others as we seek to negotiate some relief in this bill for 
those who lost their homes due to Hurricane Katrina and, 
without negligence, did not buy flood insurance to protect 
their properties.

                                                      Brad Sherman.

                                  
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