[United States Statutes at Large, Volume 118, 108th Congress, 2nd Session]
[From the U.S. Government Publishing Office, www.gpo.gov]

118 STAT. 712

Public Law 108-264
108th Congress

An Act


 
To amend the National Flood Insurance Act of 1968 to reduce losses to
properties for which repetitive flood insurance claim payments have been
made. NOTE: June 30, 2004 -  [S. 2238]

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, NOTE: Bunning-
Bereuter-Blumenauer Flood Insurance Reform Act of 2004. 42 USC 4001
note.

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

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

TITLE I--AMENDMENTS TO FLOOD INSURANCE ACT OF 1968

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

TITLE II--MISCELLANEOUS PROVISIONS

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

SEC. 2. CONGRESSIONAL FINDINGS. NOTE: 42 USC 4011 note.

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

[[Page 713]]
118 STAT. 713

recovery from floods, mitigate future losses, save
lives, and reduce the personal and national costs of
flood disasters;
(2) the national flood insurance program insures
approximately 4,400,000 policyholders;
(3) approximately 48,000 properties currently insured under
the program have experienced, within a 10-year period, 2 or more
flood losses where each such loss exceeds the amount $1,000;
(4) approximately 10,000 of these repetitive-loss properties
have experienced either 2 or 3 losses that cumulatively exceed
building value or 4 or more losses, each exceeding $1,000;
(5) repetitive-loss properties constitute a significant
drain on the resources of the national flood insurance program,
costing about $200,000,000 annually;
(6) repetitive-loss properties comprise approximately 1
percent of currently insured properties but are expected to
account for 25 to 30 percent of claims losses;
(7) the vast majority of repetitive-loss properties were
built before local community implementation of floodplain
management standards under the program and thus are eligible for
subsidized flood insurance;
(8) while some property owners take advantage of the program
allowing subsidized flood insurance without requiring mitigation
action, others are trapped in a vicious cycle of suffering
flooding, then repairing flood damage, then suffering flooding,
without the means to mitigate losses or move out of harm's way;
(9) mitigation of repetitive-loss properties through
buyouts, elevations, relocations, or flood-proofing will produce
savings for policyholders under the program and for Federal
taxpayers through reduced flood insurance losses and reduced
Federal disaster assistance;
(10) a strategy of making mitigation offers aimed at high-
priority repetitive-loss properties and shifting more of the
burden of recovery costs to property owners who choose to remain
vulnerable to repetitive flood damage can encourage property
owners to take appropriate actions that reduce loss of life and
property damage and benefit the financial soundness of the
program;
(11) the method for addressing repetitive-loss properties
should be flexible enough to take into consideration legitimate
circumstances that may prevent an owner from taking a mitigation
action; and
(12) focusing the mitigation and buy-out of repetitive loss
properties upon communities and property owners that choose to
voluntarily participate in a mitigation and buy-out program will
maximize the benefits of such a program, while minimizing any
adverse impact on communities and property owners.

[[Page 714]]
118 STAT. 714

TITLE I--AMENDMENTS TO FLOOD INSURANCE ACT OF 1968

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

(a) Borrowing Authority.--The first sentence of section 1309(a) of
the National Flood Insurance Act of 1968 (42 U.S.C. 4016(a)), is amended
by striking ``through December'' and all that follows through ``, and''
and inserting ``through the date specified in section 1319, and''.
(b) Authority for Contracts.--Section 1319 of the National Flood
Insurance Act of 1968 (42 U.S.C. 4026), is amended by striking ``after''
and all that follows and inserting ``after September 30, 2008.''.
(c) Emergency Implementation.--Section 1336(a) of the National Flood
Insurance Act of 1968 (42 U.S.C. 4056(a)), is amended by striking
``during the period'' and all that follows through ``in accordance'' and
inserting ``during the period ending on the date specified in section
1319, in accordance''.
(d) Authorization of Appropriations for Studies.--Section 1376(c) of
the National Flood Insurance Act of 1968 (42 U.S.C. 4127(c)), is amended
by striking ``through'' and all that follows and inserting ``through the
date specified in section 1319, for studies under this title.''.
SEC. 102. ESTABLISHMENT OF PILOT PROGRAM FOR MITIGATION OF SEVERE
REPETITIVE LOSS PROPERTIES.

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

``SEC. 1361A. NOTE: 42 USC 4102a. PILOT PROGRAM FOR MITIGATION OF
SEVERE REPETITIVE LOSS PROPERTIES.

``(a) Authority.--To the extent amounts are made available for use
under this section, the Director may, subject to the limitations of this
section, provide financial assistance to States and communities that
decide to participate in the pilot program established under this
section for taking actions with respect to severe repetitive loss
properties (as such term is defined in subsection (b)) to mitigate flood
damage to such properties and losses to the National Flood Insurance
Fund from such properties.
``(b) Severe Repetitive Loss Property.--For purposes of this
section, the term `severe repetitive loss property' has the following
meaning:
``(1) Single-family properties.--In the case of a property
consisting of 1 to 4 residences, such term means a property
that--
``(A) is covered under a contract for flood
insurance made available under this title; and
``(B) has incurred flood-related damage--
``(i) for which 4 or more separate claims
payments have been made under flood insurance
coverage under this title, with the amount of each
such claim exceeding $5,000, and with the
cumulative amount of such claims payments
exceeding $20,000; or

[[Page 715]]
118 STAT. 715

``(ii) for which at least 2 separate claims
payments have been made under such coverage, with
the cumulative amount of such claims exceeding the
value of the property.
``(2) NOTE: Regulations. Multifamily properties.--In the
case of a property consisting of 5 or more residences, such term
shall have such meaning as the Director shall by regulation
provide.

``(c) Eligible Activities.--Amounts provided under this section to a
State or community may be used only for the following activities:
``(1) Mitigation activities.--To carry out mitigation
activities that reduce flood damages to severe repetitive loss
properties, including elevation, relocation, demolition, and
floodproofing of structures, and minor physical localized flood
control projects, and the demolition and rebuilding of
properties to at least Base Flood Elevation or greater, if
required by any local ordinance.
``(2) Purchase.--To purchase severe repetitive loss
properties, subject to subsection (g).

``(d) Matching Requirement.--
``(1) In general.--Except as provided in paragraph (2), in
any fiscal year the Director may not provide assistance under
this section to a State or community in an amount exceeding 3
times the amount that the State or community certifies, as the
Director shall require, that the State or community will
contribute from non-Federal funds for carrying out the eligible
activities to be funded with such assistance amounts.
``(2) Reduced community match.--With respect to any 1-year
period in which assistance is made available under this section,
the Director may adjust the contribution required under
paragraph (1) by any State, and for the communities located in
that State, to not less than 10 percent of the cost of the
activities for each severe repetitive loss property for which
grant amounts are provided if, for such year--
``(A) the State has an approved State mitigation
plan meeting the requirements for hazard mitigation
planning under section 322 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C.
5165) that specifies how the State intends to reduce the
number of severe repetitive loss properties; and
``(B) the Director determines, after consultation
with the State, that the State has taken actions to
reduce the number of such properties.
``(3) Non-federal funds.--For purposes of this subsection,
the term `non-Federal funds' includes State or local agency
funds, in-kind contributions, any salary paid to staff to carry
out the eligible activities of the recipient, the value of the
time and services contributed by volunteers to carry out such
activities (at a rate determined by the Director), and the value
of any donated material or building and the value of any lease
on a building.

``(e) Notice of Mitigation Program.--
``(1) In general.--Upon selecting a State or community to
receive assistance under subsection (a) to carry out eligible
activities, the Director shall notify the owners of a severe

[[Page 716]]
118 STAT. 716

repetitive loss property, in plain language, within that State
or community--
``(A) that their property meets the definition of a
severe repetitive loss property under this section;
``(B) that they may receive an offer of assistance
under this section;
``(C) of the types of assistance potentially
available under this section;
``(D) of the implications of declining such offer of
assistance under this section; and
``(E) that there is a right to appeal under this
section.
``(2) Identification of severe repetitive loss properties.--
The Director shall take such steps as are necessary to identify
severe repetitive loss properties, and submit that information
to the relevant States and communities.

``(f) Standards for Mitigation Offers.--The program under this
section for providing assistance for eligible activities for severe
repetitive loss properties shall be subject to the following
limitations:
``(1) Priority.--In determining the properties for which to
provide assistance for eligible activities under subsection (c),
the Director shall provide assistance for properties in the
order that will result in the greatest amount of savings to the
National Flood Insurance Fund in the shortest period of time, in
a manner consistent with the allocation formula under paragraph
(5).
``(2) Offers.--The Director shall provide assistance in a
manner that permits States and communities to make offers to
owners of severe repetitive loss properties to take eligible
activities under subsection (c) as soon as practicable.
``(3) Consultation.--In determining for which eligible
activities under subsection (c) to provide assistance with
respect to a severe repetitive loss property, the relevant
States and communities shall consult, to the extent practicable,
with the owner of the property.
``(4) Deference to local mitigation decisions.--The Director
shall not, by rule, regulation, or order, establish a priority
for funding eligible activities under this section that gives
preference to one type or category of eligible activity over any
other type or category of eligible activity.
``(5) Allocation.--
``(A) In general.--Subject to subparagraphs (B) and
(C), of the total amount made available for assistance
under this section in any fiscal year, the Director
shall allocate assistance to a State, and the
communities located within that State, based upon the
percentage of the total number of severe repetitive loss
properties located within that State.
``(B) Redistribution.--Any funds allocated to a
State, and the communities within the State, under
subparagraph (A) that have not been obligated by the end
of each fiscal year shall be redistributed by the
Director to other States and communities to carry out
eligible activities in accordance with this section.
``(C) Exception.--Of the total amount made available
for assistance under this section in any fiscal year, 10
percent shall be made available to communities that--

[[Page 717]]
118 STAT. 717

``(i) contain one or more severe repetitive
loss properties; and
``(ii) are located in States that receive
little or no assistance, as determined by the
Director, under the allocation formula under
subparagraph (A).
``(6) Notice.--Upon making an offer to provide assistance
with respect to a property for any eligible activity under
subsection (c), the State or community shall notify each holder
of a recorded interest on the property of such offer and
activity.

``(g) Purchase Offers.--A State or community may take action under
subsection (c)(2) to purchase a severe repetitive loss property only if
the following requirements are met:
``(1) Use of property.--The State or community enters into
an agreement with the Director that provides assurances that the
property purchased will be used in a manner that is consistent
with the requirements of section 404(b)(2)(B) of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C.
5170c(b)(2)(B)) for properties acquired, accepted, or from which
a structure will be removed pursuant to a project provided
property acquisition and relocation assistance under such
section 404(b).
``(2) Offers.--The Director shall provide assistance in a
manner that permits States and communities to make offers to
owners of severe repetitive loss properties and of associated
land to engage in eligible activities as soon as possible.
``(3) Purchase price.--The amount of purchase offer is not
less than the greatest of--
``(A) the amount of the original purchase price of
the property, when purchased by the holder of the
current policy of flood insurance under this title;
``(B) the total amount owed, at the time the offer
to purchase is made, under any loan secured by a
recorded interest on the property; and
``(C) an amount equal to the fair market value of
the property immediately before the most recent flood
event affecting the property, or an amount equal to the
current fair market value of the property.
``(4) Comparable housing payment.--If a purchase offer made
under paragraph (2) is less than the cost of the homeowner-
occupant to purchase a comparable replacement dwelling outside
the flood hazard area in the same community, the Director shall
make available an additional relocation payment to the
homeowner-occupant to apply to the difference.

``(h) Increased Premiums in Cases of Refusal To Mitigate.--
``(1) In general.--In any case in which the owner of a
severe repetitive loss property refuses an offer to take action
under paragraph (1) or (2) of subsection (c) with respect to
such property, the Director shall--
``(A) NOTE: Notification. notify each holder of
a recorded interest on the property of such refusal; and
``(B) notwithstanding subsections (a) through (c) of
section 1308, thereafter the chargeable premium rate
with respect to the property shall be the amount equal
to 150 percent of the chargeable rate for the property
at the time that the offer was made, as adjusted by any
other premium adjustments otherwise applicable to the
property

[[Page 718]]
118 STAT. 718

and any subsequent increases pursuant to paragraph (2)
and subject to the limitation under paragraph (3).
``(2) Increased premiums upon subsequent flood damage.--
Notwithstanding subsections (a) through (c) of section 1308, if
the owner of a severe repetitive loss property does not accept
an offer to take action under paragraph (1) or (2) of subsection
(c) with respect to such property and a claim payment exceeding
$1,500 is made under flood insurance coverage under this title
for damage to the property caused by a flood event occurring
after such offer is made, thereafter the chargeable premium rate
with respect to the property shall be the amount equal to 150
percent of the chargeable rate for the property at the time of
such flood event, as adjusted by any other premium adjustments
otherwise applicable to the property and any subsequent
increases pursuant to this paragraph and subject to the
limitation under paragraph (3).
``(3) Limitation on increased premiums.--In no case may the
chargeable premium rate for a severe repetitive loss property be
increased pursuant to this subsection to an amount exceeding the
applicable estimated risk premium rate for the area (or
subdivision thereof) under section 1307(a)(1).
``(4) Treatment of deductibles.--Any increase in chargeable
premium rates required under this subsection for a severe
repetitive loss property may be carried out, to the extent
appropriate, as determined by the Director, by adjusting any
deductible charged in connection with flood insurance coverage
under this title for the property.
``(5) Notice of continued offer.--Upon each renewal or
modification of any flood insurance coverage under this title
for a severe repetitive loss property, the Director shall notify
the owner that the offer made pursuant to subsection (c) is
still open.
``(6) Appeals.--
``(A) In general.--Any owner of a severe repetitive
loss property may appeal a determination of the Director
to take action under paragraph (1)(B) or (2) with
respect to such property, based only upon the following
grounds:
``(i) As a result of such action, the owner of
the property will not be able to purchase a
replacement primary residence of comparable value
and that is functionally equivalent.
``(ii) Based on independent information, such
as contractor estimates or appraisals, the
property owner believes that the price offered for
purchasing the property is not an accurate
estimation of the value of the property, or the
amount of Federal funds offered for mitigation
activities, when combined with funds from non-
Federal sources, will not cover the actual cost of
mitigation.
``(iii) As a result of such action, the
preservation or maintenance of any prehistoric or
historic district, site, building, structure, or
object included in, or eligible for inclusion in,
the National Register of Historic Places will be
interfered with, impaired, or disrupted.

[[Page 719]]
118 STAT. 719

``(iv) The flooding that resulted in the flood
insurance claims described in subsection (b)(2)
for the property resulted from significant actions
by a third party in violation of Federal, State,
or local law, ordinance, or regulation.
``(v) In purchasing the property, the owner
relied upon flood insurance rate maps of the
Federal Emergency Management Agency that were
current at the time and did not indicate that the
property was located in an area having special
flood hazards.
``(vi) The owner of the property, based on
independent information, such as contractor
estimates or other appraisals, demonstrates that
an alternative eligible activity under subsection
(c) is at least as cost effective as the initial
offer of assistance.
``(B) NOTE: Deadlines. Procedure.--An appeal
under this paragraph of a determination of the Director
shall be made by filing, with the Director, a request
for an appeal within 90 days after receiving notice of
such determination. Upon receiving the request, the
Director shall select, from a list of independent third
parties compiled by the Director for such purpose, a
party to hear such appeal. Within 90 days after filing
of the request for the appeal, such third party shall
review the determination of the Director and shall set
aside such determination if the third party determines
that the grounds under subparagraph (A) exist. During
the pendency of an appeal under this paragraph, the
Director shall stay the applicability of the rates
established pursuant to paragraph (1)(B) or (2), as
applicable.
``(C) Effect of final determination.--In an appeal
under this paragraph--
``(i) if a final determination is made in
favor of the property owner under subparagraph (A)
exist, the third party hearing such appeal shall
require the Director to reduce the chargeable risk
premium rate for flood insurance coverage for the
property involved in the appeal from the amount
required under paragraph (1)(B) or (2) to the
amount paid prior to the offer to take action
under paragraph (1) or (2) of subsection (c); and
``(ii) if a final determination is made that
the grounds under subparagraph (A) do not exist,
the Director shall promptly increase the
chargeable risk premium rate for such property to
the amount established pursuant to paragraph
(1)(B) or (2), as applicable, and shall collect
from the property owner the amount necessary to
cover the stay of the applicability of such
increased rates during the pendency of the appeal.
``(D) Costs.--If the third party hearing an appeal
under this paragraph is compensated for such service,
the costs of such compensation shall be borne--
``(i) by the owner of the property requesting
the appeal, if the final determination in the
appeal is that the grounds under subparagraph (A)
do not exist; and

[[Page 720]]
118 STAT. 720

``(ii) by the National Flood Insurance Fund,
if such final determination is that the grounds
under subparagraph (A) do exist.
``(E) NOTE: Deadline. Report.--Not later than 6
months after the date of the enactment of the Bunning-
Bereuter-Blumenauer Flood Insurance Reform Act of 2004,
the Director shall submit a report describing the rules,
procedures, and administration for appeals under this
paragraph to--
``(i) the Committee on Banking, Housing, and
Urban Affairs of the Senate; and
``(ii) the Committee on Financial Services of
the House of Representatives.

``(i) Discretionary Actions in Cases of Fraudulent Claims.--If the
Director determines that a fraudulent claim was made under flood
insurance coverage under this title for a severe repetitive loss
property, the Director may--
``(1) cancel the policy and deny the provision to such
policyholder of any new flood insurance coverage under this
title for the property; or
``(2) refuse to renew the policy with such policyholder upon
expiration and deny the provision of any new flood insurance
coverage under this title to such policyholder for the property.

``(j) Rules.--
``(1) In general.--The Director shall, by rule--
``(A) subject to subsection (f)(4), develop
procedures for the distribution of funds to States and
communities to carry out eligible activities under this
section; and
``(B) ensure that the procedures developed under
paragraph (1)--
``(i) require the Director to notify States
and communities of the availability of funding
under this section, and that participation in the
pilot program under this section is optional;
``(ii) provide that the Director may assist
States and communities in identifying severe
repetitive loss properties within States or
communities;
``(iii) allow each State and community to
select properties to be the subject of eligible
activities, and the appropriate eligible activity
to be performed with respect to each severe
repetitive loss property; and
``(iv) require each State or community to
submit a list of severe repetitive loss properties
to the Director that the State or community would
like to be the subject of eligible activities
under this section.
``(2) NOTE: Deadline. Consultation.--Not later than 90
days after the date of enactment of this Act, the Director shall
consult with State and local officials in carrying out paragraph
(1)(A), and provide an opportunity for an oral presentation, on
the record, of data and arguments from such officials.

``(k) Funding.--
``(1) In general.--Pursuant to section 1310(a)(8), the
Director may use amounts from the National Flood Insurance Fund
to provide assistance under this section in each of fiscal years
2005, 2006, 2007, 2008, and 2009, except that the amount so used
in each such fiscal year may not exceed $40,000,000 and shall
remain available until expended. Notwithstanding

[[Page 721]]
118 STAT. 721

any other provision of this title, amounts made available
pursuant to this subsection shall not be subject to offsetting
collections through premium rates for flood insurance coverage
under this title.
``(2) Administrative expenses.--Of the amounts made
available under this subsection, the Director may use up to 5
percent for expenses associated with the administration of this
section.

``(l) Termination.--The Director may not provide assistance under
this section to any State or community after September 30, 2009.''.
(b) Availability of National Flood Insurance Fund Amounts.--Section
1310(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4017(a))
is amended--
(1) in paragraph (7), by striking ``and'' at the end; and
(2) by striking paragraph (8) and inserting the following:
``(8) for financial assistance under section 1361A to States
and communities for taking actions under such section with
respect to severe repetitive loss properties, but only to the
extent provided in section 1361A(i); and''.
SEC. 103. AMENDMENTS TO EXISTING FLOOD MITIGATION ASSISTANCE
PROGRAM.

(a) Standard for Approval of Mitigation Plans.--Section 1366(e)(3)
of the National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is amended
by adding at the end the following new sentence: ``The Director may
approve only mitigation plans that give priority for funding to such
properties, or to such subsets of properties, as are in the best
interest of the National Flood Insurance Fund.''.
(b) Priority for Mitigation Assistance.--Section 1366(e) of the
National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is amended by
striking paragraph (4) and inserting the following:
``(4) Priority for mitigation assistance.--In providing
grants under this subsection for mitigation activities, the
Director shall give first priority for funding to such
properties, or to such subsets of such properties as the
Director may establish, that the Director determines are in the
best interests of the National Flood Insurance Fund and for
which matching amounts under subsection (f) are available.''.

(c) Coordination With States and Communities.--Section 1366 of the
National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is amended by
adding at the end the following:
``(m) Coordination With States and Communities.--The Director shall,
in consultation and coordination with States and communities take such
actions as are appropriate to encourage and improve participation in the
national flood insurance program of owners of properties, including
owners of properties that are not located in areas having special flood
hazards (the 100-year floodplain), but are located within flood prone
areas.''.
(d) Funding.--Section 1367 of the National Flood Insurance Act of
1968 (42 U.S.C. 4104d) is amended--
(1) in subsection (b), by striking paragraph (1) and
inserting the following:
``(1) in each fiscal year, amounts from the National Flood
Insurance Fund not exceeding $40,000,000, to remain available
until expended;'';

[[Page 722]]
118 STAT. 722

(2) by redesignating subsections (c) and (d) as subsections
(d) and (e), respectively; and
(3) by inserting after subsection (b) the following:

``(c) Administrative Expenses.--The Director may use not more than 5
percent of amounts made available under subsection (b) to cover
salaries, expenses, and other administrative costs incurred by the
Director to make grants and provide assistance under sections 1366 and
1323.''.
(e) Reduced Community Match.--Section 1366(g) of the National Flood
Insurance Act of 1968 (42 U.S.C. 4104c(g)), is amended--
(2) by redesignating paragraph (2) as paragraph (3); and
(3) by inserting after paragraph (1) the following:
``(2) Reduced community match.--With respect to any 1-year
period in which assistance is made available under this section,
the Director may adjust the contribution required under
paragraph (1) by any State, and for the communities located in
that State, to not less than 10 percent of the cost of the
activities for each severe repetitive loss property for which
grant amounts are provided if, for such year--
``(A) the State has an approved State mitigation
plan meeting the requirements for hazard mitigation
planning under section 322 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C.
5165) that specifies how the State intends to reduce the
number of severe repetitive loss properties; and
``(B) the Director determines, after consultation
with the State, that the State has taken actions to
reduce the number of such properties.''.

(f) National Flood Mitigation Fund.--Section 1366(b)(2) of the
National Flood Insurance Act of 1968 (42 U.S.C. 4104c(b)(2)), is amended
by striking ``$1,500,000'' and inserting ``7.5 percent of the available
funds under this section''.
SEC. 104. FEMA AUTHORITY TO FUND MITIGATION ACTIVITIES FOR
INDIVIDUAL REPETITIVE CLAIMS PROPERTIES.

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

``SEC. 1323. NOTE: 42 USC 4030. GRANTS FOR REPETITIVE INSURANCE
CLAIMS PROPERTIES.

``(a) In General.--The Director may provide funding for mitigation
actions that reduce flood damages to individual properties for which 1
or more claim payments for losses have been made under flood insurance
coverage under this title, but only if the Director determines that--
``(1) such activities are in the best interest of the
National Flood Insurance Fund; and
``(2) such activities cannot be funded under the program
under section 1366 because--
``(A) the requirements of section 1366(g) are not
being met by the State or community in which the
property is located; or
``(B) the State or community does not have the
capacity to manage such activities.

``(b) Priority for Worst-Case Properties.--In determining the
properties for which funding is to be provided under this section,

[[Page 723]]
118 STAT. 723

the Director shall consult with the States in which such properties are
located and provide assistance for properties in the order that will
result in the greatest amount of savings to the National Flood Insurance
Fund in the shortest period of time.''.
(b) Availability of National Flood Insurance Fund Amounts.--Section
1310(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4017(a))
is amended by adding at the end the following:
``(9) for funding, not to exceed $10,000,000 in any fiscal
year, for mitigation actions under section 1323, except that,
notwithstanding any other provision of this title, amounts made
available pursuant to this paragraph shall not be subject to
offsetting collections through premium rates for flood insurance
coverage under this title.''.
SEC. 105. AMENDMENTS TO ADDITIONAL COVERAGE FOR COMPLIANCE WITH
LAND USE AND CONTROL MEASURES.

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

(b) Definitions.--Section 1370(a) of the National Flood Insurance
Act of 1968 (42 U.S.C. 4121(a)) is amended--
(1) by striking paragraph (7) and inserting the following:
``(7) the term `repetitive loss structure' means a structure
covered by a contract for flood insurance that--
``(A) has incurred flood-related damage on 2
occasions, in which the cost of repair, on the average,
equaled or exceeded 25 percent of the value of the
structure at the time of each such flood event; and

[[Page 724]]
118 STAT. 724

``(B) at the time of the second incidence of flood-
related damage, the contract for flood insurance
contains increased cost of compliance coverage.'';
(2) in paragraph (13), by striking ``and'' at the end;
(3) in paragraph (14), by striking the period and inserting
``; and''; and
(4) by adding at the end the following:
``(15) the term `substantially damaged structure' means a
structure covered by a contract for flood insurance that has
incurred damage for which the cost of repair exceeds an amount
specified in any regulation promulgated by the Director, or by a
community ordinance, whichever is lower.''.

SEC. 106. ACTUARIAL RATE PROPERTIES.

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

(b) Inapplicability of Annual Limitations on Premium Increases.--
Section 1308(e) of the National Flood Insurance Act of 1968 (42 U.S.C.
4015(e)) is amended by striking ``Notwithstanding'' and inserting
``Except with respect to properties described under paragraph (2) or (3)
of subsection (c), and notwithstanding''.

SEC. 107. GEOSPATIAL DIGITAL FLOOD HAZARD DATA. NOTE: 42 USC 4101
note.

For the purposes of flood insurance and floodplain management
activities conducted pursuant to the National Flood Insurance Program
under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.),
geospatial digital flood hazard data distributed by the Federal
Emergency Management Agency, or its designee, or the printed products
derived from that data, are interchangeable and legally equivalent for
the determination of the location of 1 in 100 year and 1 in 500 year
flood planes, provided that all other geospatial data shown on the
printed product meets or exceeds any accuracy standard promulgated by
the Federal Emergency Management Agency.
SEC. 108. REPLACEMENT OF MOBILE HOMES ON ORIGINAL SITES.

Section 1315 of the National Flood Insurance Act of 1968 (42 U.S.C.
4022) is amended by adding at the end the following:

[[Page 725]]
118 STAT. 725

``(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) NOTE: Deadline. such replacement is
conducted not later than the expiration of the 180-day
period that begins upon the subsidence (in the area of
such site) of the body of water that flooded to a level
considered lower than flood levels.
``(2) Definition.--For purposes of this subsection, the term
`mobile home' has the meaning given such term in the law of the
State in which the mobile home is located.''.
SEC. 109. REITERATION NOTE: 42 USC 4101 note. OF FEMA
RESPONSIBILITY TO MAP MUDSLIDES.

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

TITLE NOTE: 42 USC 4011 note. II--MISCELLANEOUS PROVISIONS

SEC. 201. DEFINITIONS.

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

SEC. 202. SUPPLEMENTAL FORMS.

(a) NOTE: Deadline. In General.--Not later than 6 months after
the date of enactment of this Act, the Director shall develop
supplemental forms to be issued in conjunction with the issuance of a
flood insurance policy that set forth, in simple terms--
(1) the exact coverages being purchased by a policyholder;
(2) any exclusions from coverage that apply to the coverages
purchased;
(3) an explanation, including illustrations, of how lost
items and damages will be valued under the policy at the time of
loss;

[[Page 726]]
118 STAT. 726

(4) the number and dollar value of claims filed under a
flood insurance policy over the life of the property, and the
effect, under the National Flood Insurance Act of 1968 (42
U.S.C. 4001 et seq.), of the filing of any further claims under
a flood insurance policy with respect to that property; and
(5) any other information that the Director determines will
be helpful to policyholders in understanding flood insurance
coverage.

(b) Distribution.--The forms developed under subsection (a) shall be
given to--
(1) all holders of a flood insurance policy at the time of
purchase and renewal; and
(2) insurance companies and agents that are authorized to
sell flood insurance policies.

SEC. 203. ACKNOWLEDGEMENT FORM.

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

(b) Distribution.--Copies of an acknowledgement form executed under
subsection (a) shall be made available to the purchaser and the
Director.

SEC. 204. FLOOD INSURANCE CLAIMS HANDBOOK.

(a) NOTE: Deadline. In General.--Not later than 6 months after
the date of enactment of this Act, the Director shall develop a flood
insurance claims handbook that contains--
(1) a description of the procedures to be followed to file a
claim under the Program, including how to pursue a claim to
completion;
(2) how to file supplementary claims, proof of loss, and any
other information relating to the filing of claims under the
Program; and
(3) detailed information regarding the appeals process
established under section 205.

(b) Distribution.--The handbook developed under subsection (a) shall
be made available to--
(1) each insurance company and agent authorized to sell
flood insurance policies; and
(2) each purchaser, at the time of purchase and renewal, of
a flood insurance policy, and at the time of any flood loss
sustained by such purchaser.
SEC. 205. APPEAL NOTE: Deadline. Regulations. OF DECISIONS
RELATING TO FLOOD INSURANCE COVERAGE.

Not later than 6 months after the date of enactment of this Act, the
Director shall, by regulation, establish an appeals process through
which holders of a flood insurance policy may appeal the

[[Page 727]]
118 STAT. 727

decisions, with respect to claims, proofs of loss, and loss estimates
relating to such flood insurance policy, of--
(1) any insurance agent or adjuster, or insurance company;
or
(2) any employee or contractor of the Federal Emergency
Management Agency.
SEC. 206. STUDY NOTE: Deadline. AND REPORT ON USE OF COST
COMPLIANCE COVERAGE.

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

SEC. 207. MINIMUM TRAINING AND EDUCATION REQUIREMENTS.

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

SEC. 208. GAO STUDY AND REPORT.

(a) Study.--The Comptroller General of the United States shall
conduct a study of--
(1) the adequacy of the scope of coverage provided under
flood insurance policies in meeting the intended goal of
Congress that flood victims be restored to their pre-flood
conditions, and any recommendations to ensure that goal is being
met;
(2) the adequacy of payments to flood victims under flood
insurance policies; and
(3) the practices of the Federal Emergency Management Agency
and insurance adjusters in estimating losses incurred during a
flood, and how such practices affect the adequacy of payments to
flood victims.

(b) NOTE: Deadline. Report.--Not later than 1 year after the
date of enactment of this Act, the Comptroller General shall submit to
Congress a report regarding the results of the study under subsection
(a).
SEC. 209. PROSPECTIVE PAYMENT OF FLOOD INSURANCE PREMIUMS.

Section 1308 of the National Flood Insurance Act of 1968 (42 U.S.C.
4015) is amended by adding at the end the following:
``(f) Adjustment of Premium.--Notwithstanding any other provision of
law, if the Director determines that the holder of a flood insurance
policy issued under this Act is paying a lower

[[Page 728]]
118 STAT. 728

premium than is required under this section due to an error in the flood
plain determination, the Director may only prospectively charge the
higher premium rate.''.
SEC. 210. REPORT NOTE: Deadline. ON CHANGES TO FEE SCHEDULE OR
FEE PAYMENT ARRANGEMENTS.

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

Approved June 30, 2004.

LEGISLATIVE HISTORY--S. 2238 (H.R. 253):
---------------------------------------------------------------------------

HOUSE REPORTS: No. 108-266 accompanying H.R. 253 (Comm. on Financial
Services).
SENATE REPORTS: No. 108-262 (Comm. on Banking, Housing, and Urban
Affairs).
CONGRESSIONAL RECORD, Vol. 150 (2004):
June 15, considered and passed Senate.
June 21, considered and passed House.