69–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 115–255 

TAXPAYER EXPOSURE MITIGATION ACT OF 2017 

JULY 25, 2017.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany H.R. 2246] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 2246) to repeal the mandatory flood insurance coverage 

requirement for commercial properties located in flood hazard 

areas and to provide for greater transfer of risk under the National 

Flood Insurance Program to private capital and reinsurance markets, and for other purposes, having considered the same, report favorably thereon with an amendment and recommend that the bill 

as amended do pass. 

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 ‘‘Taxpayer Exposure Mitigation Act of 2017’’. 

SEC. 2. OPT-OUT OF MANDATORY COVERAGE REQUIREMENT FOR COMMERCIAL PROPERTIES. 

(a) AMENDMENTS TO FLOOD DISASTER PROTECTION ACT OF 1973.—The Flood Disaster Protection Act of 1973 is amended— 

(1) in section 3(a) (42 U.S.C. 4003(a))— 

(A) in paragraph (10), by striking ‘‘and’’ at the end; 

(B) in paragraph (11), by striking the period at the end and inserting ‘‘; 

and’’; and 

(C) by adding at the end the following new paragraph: 

‘‘(12) ‘residential improved real estate’ means improved real estate that— 

‘‘(A) is primarily used for residential purposes, as defined by the Federal 

entities for lending regulation; and 

2 

‘‘(B) secures financing or financial assistance provided through a federally 

related single family loan progam, as defined by the Federal entities for 

lending regulation.’’; and 

(2) in section 102 (42 U.S.C. 4012a)— 

(A) in subsection (b)— 

(i) in paragraph (1)(A)— 

(I) by inserting ‘‘residential’’ before ‘‘improved real estate’’; and 

(II) by inserting ‘‘residential’’ before ‘‘building or mobile home’’; 

(ii) in paragraph (2)— 

(I) by inserting ‘‘residential’’ before ‘‘improved real estate’’; and 

(II) by inserting ‘‘residential’’ before ‘‘building or mobile home’’; 

and 

(iii) in paragraph (3)— 

(I) in subparagraph (A), by inserting ‘‘residential’’ before ‘‘improved real estate’’; and 

(II) in the matter after and below subparagraph (B), by inserting 

‘‘residential’’ before ‘‘building or mobile home’’; 

(B) in subsection (c)(3), by striking ‘‘, in the case of any residential property, for any structure that is a part of such property’’ and inserting ‘‘for 

any structure that is part of a residential property’’; 

(C) in subsection (e)— 

(i) in paragraph (1)— 

(I) by inserting ‘‘residential’’ before ‘‘improved real estate’’; and 

(II) by inserting ‘‘residential’’ before ‘‘building or mobile home’’ 

each place such term appears; and 

(ii) in paragraph (5)— 

(I) in subparagraph (A)— 

(aa) by inserting ‘‘residential’’ before ‘‘improved real estate’’ 

each place such term appears; and 

(bb) by inserting ‘‘residential’’ before ‘‘building or mobile 

home’’ each place such term appears; 

(II) in subparagraph (B), by inserting ‘‘residential’’ before ‘‘building or mobile home’’ each place such term appears; and 

(III) in subparagraph (C), by inserting ‘‘residential’’ before ‘‘building or mobile home’’; and 

(D) in subsection (h)— 

(i) by inserting ‘‘residential’’ before ‘‘improved real estate’’ each place 

such term appears; and 

(ii) in the matter preceding paragraph (1), by inserting ‘‘residential’’ 

before ‘‘building or mobile home’’. 

(b) AMENDMENTS TO NATIONAL FLOOD INSURANCE ACT OF 1968.—The National 

Flood Insurance Act of 1968 is amended— 

(1) in section 1364(a) (42 U.S.C. 4104a(a))— 

(A) in paragraph (1), by inserting ‘‘residential’’ before ‘‘improved real estate’’; 

(B) in paragraph (2), by inserting ‘‘residential’’ before ‘‘improved real estate’’; and 

(C) in paragraph (3)(A), by inserting ‘‘residential’’ before ‘‘building’’; 

(2) in section 1365 (42 U.S.C. 4104b)— 

(A) in subsection (a)— 

(i) by inserting ‘‘residential’’ before ‘‘improved real estate’’; and 

(ii) by inserting ‘‘residential’’ before ‘‘building’’; 

(B) in subsection (b)(2)— 

(i) by inserting ‘‘residential’’ before ‘‘building’’ each place such term 

appears; and 

(ii) by inserting ‘‘residential’’ before ‘‘improved real estate’’ each place 

such term appears; 

(C) in subsection (d), by inserting ‘‘residential’’ before ‘‘improved real estate’’ each place such term appears; and 

(D) in subsection (e)— 

(i) by inserting ‘‘residential’’ before ‘‘improved real estate’’; and 

(ii) by inserting ‘‘residential’’ before ‘‘building’’ each place such term 

appears; and 

(3) in section 1370 (42 U.S.C. 4121)— 

(A) in paragraph (8), by inserting ‘‘residential’’ before ‘‘improved real estate’’; 

(B) by redesignating paragraphs (14) and (15) as paragraphs (15) and 

(16), respectively; and 

(C) by inserting after paragraph (13) the following new paragraph: 

3 

‘‘(14) the term ‘residential improved real estate’ means improved real estate 

that— 

‘‘(A) is primarily used for residential purposes, as defined by the Federal 

entities for lending regulation; and 

‘‘(B) secures financing or financial assistance provided through a federally 

related single family loan progam, as defined by the Federal entities for 

lending regulation;’’. 

(c) RULE OF CONSTRUCTION.—This section and the amendments made by this section may not be construed to prohibit the Administrator of the Federal Emergency 

Management Agency from offering flood insurance coverage under the National 

Flood Insurance Program for eligible non-residential properties, other residential 

multifamily properties, or structures financed with commercial loans, or to prohibit 

the purchase of such coverage for such eligible properties. 

SEC. 3. RISK TRANSFER REQUIREMENT. 

Subsection (e) of section 1345 of the National Flood Insurance Act of 1968 (42 

U.S.C. 4081(e)) is amended— 

(1) by striking ‘‘(e) RISK TRANSFER.—The Administrator’’ and inserting the following: 

‘‘(e) RISK TRANSFER.— 

‘‘(1) AUTHORITY.—The Administrator’’; and 

(2) by adding at the end the following new paragraph: 

‘‘(2) REQUIRED RISK TRANSFER COVERAGE.— 

‘‘(A) REQUIREMENT.—Not later than the expiration of the 18-month period 

beginning upon the date of the enactment of this paragraph and at all 

times thereafter, the Administrator shall annually cede a portion of the risk 

of the flood insurance program under this title to the private reinsurance 

or capital markets, or any combination thereof, and at rates and terms that 

the Administrator determines to be reasonable and appropriate, in an 

amount that— 

‘‘(i) is sufficient to maintain the ability of the program to pay claims; 

and 

‘‘(ii) manages and limits the annual exposure of the flood insurance 

program to flood losses in accordance with the probable maximum loss 

target established for such year under subparagraph (B). 

‘‘(B) PROBABLE MAXIMUM LOSS TARGET.—The Administrator shall for each 

fiscal year, establish a probable maximum loss target for the national flood 

insurance program that shall be the maximum probable loss under the national flood insurance program that is expected to occur in such fiscal year. 

‘‘(C) CONSIDERATIONS.—In establishing the probable maximum loss target 

under subparagraph (B) for each fiscal year and carrying out subparagraph 

(A), the Administrator shall consider— 

‘‘(i) the probable maximum loss targets for other United States public 

natural catastrophe insurance programs, including as State wind pools 

and earthquake programs; 

‘‘(ii) the probable maximum loss targets of other risk management organizations, including the Federal National Mortgage Association and 

the Federal Home Loan Mortgage Corporation; 

‘‘(iii) catastrophic, actuarial, and other appropriate data modeling results of the national flood insurance program portfolio; 

‘‘(iv) the availability of funds in the National Flood Insurance Fund 

established under section 1310 (42 U.S.C. 4017); 

‘‘(v) the availability of funds in the National Flood Insurance Reserve 

Fund established under section 1310A (42 U.S.C. 4017a); 

‘‘(vi) the availability of borrowing authority under section 1309 (42 

U.S.C. 4016); 

‘‘(vii) the ability of the Administrator to repay outstanding debt; 

‘‘(viii) amounts appropriated to the Administrator to carry out the national flood insurance program; 

‘‘(ix) reinsurance, capital markets, catastrophe bonds, collateralized 

reinsurance, resilience bonds, and other insurance-linked securities, 

and other risk transfer opportunities; and 

‘‘(x) any other factor the Administrator determines appropriate. 

‘‘(D) MULTI-YEAR CONTRACTS.—Nothing in this paragraph may be construed to prevent or prohibit the Administrator from complying with the requirement under subparagraph (A) regarding ceding risk through contracts 

having a duration longer than one year.’’. 

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SEC. 4. COMMUNITY FLOOD MAPS. 

(a) TECHNICAL MAPPING ADVISORY COUNCIL.—Section 100215 of the BiggertWaters Flood Insurance Reform Act of 2012 (42 U.S.C. 4101a) is amended— 

(1) in subsection (c)— 

(A) in paragraph (5)(B), by striking ‘‘and’’ at the end; 

(B) by redesignating paragraph (6) as paragraph (9); and 

(C) by inserting after paragraph (5) the following new paragraphs: 

‘‘(6) recommend to the Administrator methods or actions to make the flood 

mapping processes more efficient; 

‘‘(7) recommend to the Administrator methods or actions to minimize any cost, 

data, and paperwork requirements of the flood mapping processes; 

‘‘(8) assist communities, and in particular smaller communities, in locating 

the resources required to participate in the development of flood elevations and 

flood hazard area designations; and’’; and 

(2) by adding at the end the following new subsection: 

‘‘(m) COMMUNITY FLOOD MAPS.— ‘‘(1) STANDARDS AND PROCEDURES.—In addition to the other duties of the 

Council under this section, not later than the expiration of the 12-month period 

beginning on the date of the enactment of this subsection, the Council shall recommend to the Administrator standards and requirements for chief executive 

officers, or entities designated by chief executive officers, of States and communities participating in the National Flood Insurance Program to use in mapping 

flood hazards located in States and communities that choose to develop alternative maps to the flood insurance rate maps developed by the Agency. The recommended standards and requirements shall include procedures for providing 

notification and appeal rights to individuals within the communities of the proposed flood elevation determinations. 

‘‘(2) EXEMPTION FROM RULEMAKING.—Until such time as the Administrator 

promulgates regulations implementing paragraph (1) of this subsection, the Administrator may, notwithstanding any other provision of law, adopt policies and 

procedures necessary to implement such paragraphs without undergoing notice 

and comment rulemaking and without conducting regulatory analyses otherwise 

required by statute, regulation, or executive order.’’. 

(b) FEMA IDENTIFICATION OF FLOOD-PRONE AREAS.—Subsection (a) of section 

1360 of the National Flood Insurance Act of 1968 (42 U.S.C. 4101(a)) is amended— 

(1) in paragraph (2), by striking the period at the end and inserting ‘‘; and’’; 

(2) by redesignating paragraphs (1) and (2) as subparagraphs (A), and (B), respectively, and realigning such subparagraphs so as to be indented 4 ems from 

the left margin; 

(3) by striking ‘‘is authorized to consult’’ and inserting the following: ‘‘is authorized— 

‘‘(1) to consult’’; 

(4) by adding at the end the following new paragraph: 

‘‘(2) to receive proposed alternative maps from communities developed pursuant to standards and requirements recommended by the Technical Mapping Advisory Council, as required by section 100215(m) of the Biggert-Waters Flood Insurance Reform Act of 2012 (42 U.S.C. 4101a(m)) and adopted by the Administrator as required by section 100216(c)(3) of such Act (42 U.S.C. 4101b(c)(3)), 

so that the Administrator may— 

‘‘(A) publish information with respect to all flood plain areas, including 

coastal areas located in the United States, which have special flood hazards, and 

‘‘(B) establish or update flood-risk zone data in all such areas, and make 

estimates with respect to the rates of probable flood caused loss for the various flood risk zones for each of these areas until the date specified in section 1319.’’. 

(c) NATIONAL FLOOD MAPPING PROGRAM.—Section 100216 of the Biggert-Waters 

Flood Insurance Reform Act of 2012 (42 U.S.C. 4101b) is amended— 

(1) in subsection (a), by inserting ‘‘prepared by the Administrator, or by a 

community pursuant to section 1360(a)(2) of the National Flood Insurance Act 

of 1968,’’ after ‘‘Program rate maps’’; 

(2) in subsection (c)— 

(A) in paragraph (1)(B), by striking ‘‘and’’ at the end; 

(B) in paragraph (2)(C), by striking the period at the end and inserting 

a semicolon; and 

(C) by adding at the end the following new paragraphs: 

‘‘(3) establish and adopt standards and requirements for development by 

States and communities of alternative flood insurance rate maps to be submitted to the Administrator pursuant to section 1360(a)(2) of the National Flood 

5 

Insurance Act of 1968, taking into consideration the recommendations of the 

Technical Mapping Advisory Council made pursuant to section 100215(m) of 

this Act (42 U.S.C. 4101a(m)); and 

‘‘(4) in the case of proposed alternative maps received by the Administrator 

pursuant to such section 1360(a)(2), not later than the expiration of the 6-month 

period beginning upon receipt of such proposed alternative maps— 

‘‘(A) determine whether such maps were developed in accordance with the 

standards and requirements adopted pursuant to paragraph (3) of this subsection; and 

‘‘(B) approve or disapprove such proposed maps for use under National 

Flood Insurance Program.’’; and 

(3) in subsection (d)(1), by inserting ‘‘maximum’’ before ‘‘30-day period’’ each 

place such term appears in subparagraphs (B) and (C). 

PURPOSE AND SUMMARY

Introduced on April 28, 2017, by Representative Blaine Luetkemeyer, H.R. 2246, the ‘‘Taxpayer Exposure Mitigation Act of 2017’’, 

amends the Flood Disaster Protection Act of 1973 to repeal the 

mandatory flood insurance coverage requirement for commercial 

properties located in flood hazard areas and to provide for greater 

transfer of risk under the National Flood Insurance Program to private capital and reinsurance markets, and for other purposes. 

BACKGROUND AND NEED FOR LEGISLATION

Floods are among the most frequently occurring and costly natural disasters. Most declarations of federal disasters by the Federal 

Emergency Management Agency (FEMA) are related to flooding. 

Yet despite the frequency and severity of losses that result from 

flooding, the private insurance market generally did not provide insurance for flooding; when it did, insurance for flood-related damage can be expensive because the properties most at-risk tend to 

be highly concentrated geographically and the potential risk of economic losses is extremely high. 

To supplement the availability of flood insurance in the private 

market, Congress, in 1968, created the National Flood Insurance 

Program (NFIP), which is administered by FEMA and provides 

flood insurance to approximately 5.1 million policyholders across 

the country. In exchange for premiums paid by policholders, NFIP 

makes federally backed flood insurance available to homeowners 

and other property owners (for example, businesses, churches, and 

farmers) in these communities. 

Homeowners with mortgages held by federally regulated lenders 

on property in participating communities identified by FEMA to be 

in Special Flood Hazard Areas are required to purchase flood insurance (mandatory purchase requirement). NFIP coverage limits vary 

by program (regular or emergency) and property type (for example, 

residential or nonresidential). In NFIP’s regular program, the maximum coverage limits for residential policyholders are $250,000 for 

buildings and $100,000 for contents. For commercial policyholders 

(that is, those with policies for nonresidential properties), the maximum coverage limit is $500,000 per building and $500,000 for contents owned by the building owner. There is additional coverage for 

contents owned by the tenants. 

Residents and business owners in over 22,000 participating communities across the United States and its territories are able to 

buy NFIP flood insurance policies through insurance agents and 

companies that participate as third-party administrators in the 

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‘‘Write Your Own’’ (WYO) program. The WYO program allows private insurance carriers to issue and service government underwritten and taxpayer backed NFIP policies with no private financial liability from the insurer. Insurance companies that participate 

in the WYO program receive an expense allowance for policies they 

write and the claims they process. In addition, their agents earn 

a commission for the policies they sell. The federal government, 

however, retains responsibility for managing the risk and paying 

claims, as well as covering any litigation costs should a WYO insurer be sued in court. 

Property owners can purchase flood insurance through the NFIP 

only if their communities participate in the NFIP. To participate in 

the NFIP, a community must agree to abide by certain statutory 

provisions intended to mitigate the risk of flooding, such as building codes that require new structures built in floodplains (high-risk 

areas) to be protected against flooding or to be elevated above the 

100-year floodplain. As of June 5, 2017, the NFIP has an outstanding debt of $24.6 billion borrowed from taxpayers, with roughly $1.1 billion available 

cash-on-hand and $5.825 billion remaining of its total temporary 

$30.425 billion Treasury borrowing authority. The NFIP’s debt results primarily from its borrowing to pay claims relating to the 

Gulf Coast hurricanes in 2005 and Superstorm Sandy in October 

2012. This borrowing stems from a structural imbalance in how the 

NFIP measures and prices for risk, resulting in only 46 percent of 

premium dollars collected in 2016 being available for the payments 

of claims. With such a low portion of premiums available to pay 

claims, the pressure on the NFIP to borrow from taxpayers increases. The NFIP’s structural budget crisis has required periodic 

legislation to increase its borrowing authority, the most recent example of which occurred in January 2013 when Congress increased 

the NFIP’s borrowing authority by $9.7 billion—from $20.725 billion to its current $30.425 billion level. 

H.R. 2246 addresses concerns that the NFIP’s fiscal condition is 

unsustainable and recognizes that further reforms are needed to 

optimize efficiency and instill market discipline. H.R. 2246 would 

require the FEMA Administrator to annually cede a portion of the 

NFIP’s risk to the private reinsurance or capital markets in an 

amount determined by the Administrator that is sufficient to maintain the program’s ability to pay claims, and limit exposure to flood 

loss. H.R. 2246 would also provide the FEMA Administrator the 

ability to enter into multi-year contracts for risk transfers. 

Historically, the NFIP had been limited to using flood insurance 

premiums, available surplus, borrowing capacity from the U.S. 

Treasury, and direct appropriations from Congress to pay claims. 

In 2012, the Biggert-Waters Flood Insurance Reform Act clarified 

FEMA’s authority to secure reinsurance from the private reinsurance and capital markets. In fact, in January 2017, FEMA, in an 

attempt to understand the reinsurance market, acquired approximately $1 billion in reinsurance coverage to insure against 26 percent of losses between $4 billion and $8 billion. H.R. 2246 provides 

more clarity and guidance on how and when FEMA would provide 

for risk transfers that maximize FEMA’s resources and protect taxpayers from catastrophic losses. H.R. 2246 would permit several 

types of risk transfers, including traditional reinsurance, catasVerDate Sep 11 2014 22:36 Jul 27, 2017 Jkt 069006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR255.XXX HR255
7 

trophe bonds, collateralized reinsurance, resilience bonds, insurance-linked securities and other types of risk transfers that may be 

created in the future. 

In recognition of the inefficiencies of the NFIP in the commercial 

and multifamily properties, H.R. 2246 would eliminate the mandatory purchase requirement for commercial and multifamily properties, while preserving the eligibility of such properties to voluntarily purchase NFIP coverage if they so choose. Today, commercial 

and multifamily properties, oftentimes valued many times over the 

maximum $500,000 NFIP coverage amount, are forced to purchase 

both NFIP and excess coverage. H.R. 2246 would rationalize the 

flood insurance market for commercial and multifamily properties 

by deferring to the lender to determine whether the loan’s collateral will be required to be covered by flood insurance. This rationalization would save costs for commercial and multifamily properties by shedding NFIP regulatory requirements that are inconsistent with insurance market practices. 

H.R. 2246, however, would ensure that commercial and multifamily properties have access to flood insurance by making it permissive for these properties to purchase NFIP policies. As a result, 

commercial and multifamily properties can opt for policies that better fit their coverage requirements such as purchasing umbrella 

policies for a group of properties. 

In recognition of the challenges that plagued the development of 

timely flood rate risk maps, H.R. 2246 authorizes alternative community flood maps, developed and financed by local governments. 

Today, FEMA is required to review each community, once every 

five years, to determine whether re-mapping is necessary. In some 

cases, however, remapping does not occur for over 10 years, thereby leaving the community subjected to outdated maps. H.R. 2246 

would require the Technical Mapping Advisory Council (TMAC) to 

develop and make recommendations to the FEMA Administrator to 

establish a set of standards, guidelines, and procedures for State 

and local governments to develop alternatives maps to the NFIP’s 

rate maps. 

Subject to certification and approval by the FEMA Administrator, these community maps would be the flood insurance rate 

map for the purposes of the NFIP, with respect to the area covered 

on the map. Community maps would be an avenue for those communities, who desire re-mapping of their areas on a more frequent 

basis or elect to use their local resources to use updated technology, 

often not available to FEMA, to produce community maps that provide more detailed data than provided by the agency. 

HEARINGS

The Committee on Financial Services’ Subcommittee on Housing 

& Insurance held two hearings examining matters relating to H.R. 

2246 on March 9, 2017 and March 16, 2017. The Committee on Financial Services held a hearing examining matters relating to H.R. 

2246 on June 7, 2017. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

June 21, 2017 to consider H.R. 2246. The Committee ordered H.R. 

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2246 to be reported favorably to the House, as amended, by a recorded vote of 36 ayes to 24 nays (Recorded vote no. FC–67), a 

quorum being present. 

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. An amendment offered by Mr. Luetkemeyer was agreed to by voice vote. The sole recorded vote was on a motion by Chairman Hensarling to report the 

bill favorably to the House, as amended. The motion was agreed to 

by a recorded vote of 36 ayes to 24 nays (Recorded vote no. FC– 

67), a quorum being present. 

9 


Insert offset folio 10 here HR255.001
10 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the Committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of 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 states that H.R. 2246 will benefit taxpayers and policyholders by repealing the mandatory flood 

insurance coverage requirement for commercial properties located 

in flood hazard areas and providing for greater transfer of risk 

under the National Flood Insurance Program to private capital and 

reinsurance markets. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of 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. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, July 24, 2017. 

Hon. JEB HENSARLING, Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2246, the Taxpayer Exposure Mitigation Act of 2017. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Robert Reese. 

Sincerely, 

MARK P. HADLEY, (For Keith Hall, Director). 

Enclosure. 

11 

H.R. 2246—Taxpayer Exposure Mitigation Act of 2017 

Summary: H.R. 2246 would eliminate the requirement for commercial properties in flood zones to have flood insurance if the 

properties are financed by a federally regulated lending institution, 

or a federal lender. The bill also would require the Federal Emergency Management Agency (FEMA) to acquire coverage for a portion of the National Flood Insurance Program’s (NFIP) potential 

cost from the private reinsurance or capital markets annually. Finally, H.R. 2246 would require FEMA to permit localities to develop and submit their own maps of local flood risks for FEMA’s 

review and approval for use in determining NFIP insurance rates. 

The cost to enact H.R. 2246 is uncertain and would depend on 

the number of commercial properties that drop NFIP coverage. 

CBO estimates that enacting H.R. 2246 would increase direct 

spending by $325 million over the 2018–2027 period, although costs 

could be significantly higher or lower. CBO also estimates that implementing the bill would cost $40 million over the 2018–2022 period, assuming appropriation of the necessary amounts. 

Because enacting H.R. 2246 would affect direct spending, pay-asyou-go procedures apply. Enacting the legislation would not affect 

revenues. 

CBO estimates that enacting H.R. 2246 would not increase net 

direct spending or on-budget deficits by more than $5 billion in any 

of the four consecutive 10-year periods beginning in 2028. 

H.R. 2246 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) 

and would impose no costs on state, local, or tribal governments. 

Estimated cost to the Federal Government: The estimated budgetary effect of H.R. 2246 is shown in the following table. The costs 

of this legislation fall within budget function 450 (community and 

regional development). 

By fiscal year, in millions of dollars— 

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017– 

2022 

2017– 

2027 

INCREASES IN DIRECT SPENDING 

Estimated Budget 

Authority ............... 0 5 5 15 30 40 40 45 45 50 50 95 325 

Estimated Outlays .... 0 5 5 15 30 40 40 45 45 50 50 95 325 

INCREASES IN SPENDING SUBJECT TO APPROPRIATION 

Estimated Authorization Level .............. 0 1 10 10 10 10 10 10 10 10 10 41 91 

Estimated Outlays .... 0 1 9 10 10 10 10 10 10 10 10 40 90 

Basis of estimate: For this estimate, CBO assumes that H.R. 

2246 will be enacted near the end of fiscal year 2017 and that the 

necessary amounts will be appropriated for each fiscal year. 

Background 

Under current law, residential and commercial property owners 

can choose to buy flood insurance through the NFIP. Property owners who buy coverage through the NFIP pay annual premiums 

which are deposited into the National Flood Insurance Fund 

(NFIF) and are used to pay flood damage claims submitted by policyholders. 

12 

Mandatory Purchase Requirement. Owners of properties that are 

located within an area designated as having at least a 1 percent 

chance of being flooded in any year (known as a Special Flood Hazard Area, or SFHA) and that are financed by a federally regulated 

lending institution, government sponsored enterprise for housing, 

or federal lender are required to carry flood insurance. Property 

owners not receiving financing from those entities or located outside an SFHA may purchase flood insurance coverage from a private carrier or the NFIP at their discretion. The level of compliance 

with this requirement is unknown. 

Currently, there are about 5 million properties insured by the 

NFIP. Of those properties, about 340,000 (or 6.7 percent) are commercial properties, CBO estimates. How many of those properties 

are subject to the mandatory purchase requirement is unknown because the properties’ lending institutions are required to enforce 

the requirement and aggregate data on properties subject to that 

requirement do not exist. 

Premiums. Most properties, about 80 percent, are charged a premium based on FEMA’s estimate of the expected cost to insure 

those properties against damages caused by flooding, what CBO 

calls actuarial premiums. The remaining 20 percent of NFIP insured properties are charged premiums that are lower than the expected cost of flood damage, what CBO calls subsidized premiums. 

In 2016, collections from actuarial and subsidized premiums totaled about $3.5 billion. In 2017, the average NFIP premium for 

commercial properties is about $2,400. 

Additional Collections. All NFIP policyholders also pay a Reserve 

Fund Assessment (RFA) equal to 15 percent of their premium and 

a surcharge equal to $25 for policies that cover primary residences 

and $250 for policies that cover nonprimary residences or commercial properties. Both the RFA and surcharge are deposited into the 

NFIP Reserve Fund and are available to pay policyholder claims if 

amounts in the NFIP are insufficient. In 2016, a total of $919 million was deposited into the Reserve Fund. In 2017, the average 

RFA and surcharge was about $600 for commercial properties. 

Reinsurance. The NFIP is also authorized to purchase reinsurance from private reinsurance or capital markets. Reinsurance is a 

mechanism by which a primary insurer, like the NFIP, can guard 

against catastrophic losses by paying a premium to one or multiple 

private entities that then assume the liability to pay certain claims 

at an agreed upon level of losses. In 2017, the NFIP purchased 

about $1 billion of reinsurance for a single flood with insurable 

claims between $4 billion and $8 billion. The NFIP paid a premium 

of $150 million for that reinsurance and the coverage will last 

through January 1, 2018. 

Direct spending 

The bill would eliminate the requirement to buy flood insurance 

for commercial properties located in an SFHA and would require 

FEMA to purchase reinsurance in the private market. 

Commercial Property. Using a database of NFIP policy information, CBO estimates that in 2017 there are approximately 230,000 

commercial structures in SFHAs with NFIP policies, of which 40 

percent pay subsidized premiums. FEMA does not track which 

NFIP insured properties are subject to that mandatory purchase 

13 

1See Government Accountability Office, Overview of GAO’s Past Work on the National Flood 

Insurance Programs (May 2014). 

requirement, but CBO expects the majority (about 75 percent) of 

those properties have a loan from a federally regulated lending institution. Thus, CBO estimates that in 2017 approximately 170,000 

commercial properties are subject to the requirement to purchase 

flood insurance. 

In 2014, the Government Accountability Office (GAO) reported 

that many property owners do not recognize the potential damage 

that may be caused to their property by a flood and underestimate 

the risk of a flood to their property.1 While CBO cannot determine 

how many commercial properties subject to the mandatory purchase requirement have NFIP coverage solely because they are required to, we expect that many such property owners underestimate their flood risk. Owners of commercial property face NFIP 

premiums and fees that average about $3,000 per year. CBO expects that within a few years about half of the owners of commercial properties currently subject to the mandatory purchase requirement would discontinue buying flood insurance under H.R. 

2246. CBO is unaware of any empirical information about the propensity of individuals to drop mandated insurance requirements 

when given the opportunity. However, because many property owners underestimate the risks they face from flooding, CBO expects 

that a significant number of commercial policyholders would gradually drop coverage if they were not required to have it. 

Based on an analysis of information provided by FEMA on the 

premiums, surcharges, other assessments paid by commercial property owners, and the expected cost to insure them, CBO estimates 

that enacting this provision would increase net direct spending by 

$325 million over the 2018–2027 period from the loss of RFA and 

surcharge collections from commercial properties that would have 

been paying actuarial premiums. That decrease in collections would 

be partially offset by fewer claims resulting from fewer policyholders. Subsidized policy holders that elected to drop NFIP coverage would reduce net spending because the expected cost of those 

policies is greater than the premiums paid for the coverage. 

CBO’s estimated costs are uncertain and costs could be significantly greater or smaller than we have estimated. CBO is confident 

that some commercial property policyholders would drop NFIP coverage under H.R. 2246 at a net cost to the program. However, without basic information about which policyholders are required to 

maintain coverage, this estimate has a wide range of uncertainty. 

Reinsurance. Section 3 of H.R. 2246 would require the NFIP to 

transfer a portion of the program’s risk to private reinsurance or 

capital markets at least once per year in a manner that would ensure that enough funds are in the NFIP to cover claims in a typical 

year. Under current law, FEMA plans to purchase additional reinsurance for the NFIP after the expiration of the current coverage 

in 2018. Because FEMA intends to continue purchasing reinsurance in future years, CBO estimates that enacting this provision 

would have no significant effect the amount of reinsurance coverage the agency buys or on NFIP spending. 

14 

Spending subject to appropriation 

Section 4 of H.R. 2246 would direct FEMA to create standards 

and requirements for states and localities that choose to develop alternative maps to the Flood Insurance Rate Maps created by 

FEMA. The section also would require FEMA to determine within 

six months of receiving any proposed alternative maps from states 

or localities whether to approve such maps for NFIP rate setting 

purposes. 

Based on an analysis of information provided by FEMA, CBO estimates that implementing this section would cost $1 million in 

2018 to establish administrative procedures to review and approve 

community flood maps and $10 million each year thereafter to review, analyze, and make a determination on community flood maps 

that would be submitted by local jurisdictions around the country. 

Such spending would be subject to appropriation. In 2017, $178 

million was appropriated for FEMA’s flood mapping and related activities. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays that are subject to those pay-as-you-go procedures are shown in the following table. 

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 2246, AS ORDERED REPORTED BY THE 

HOUSE COMMITTEE ON FINANCIAL SERVICES ON JUNE 21, 2017 

By fiscal year, in millions of dollars— 

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017– 

2022 

2017– 

2027 

NET INCREASE IN THE DEFICIT 

Statutory Pay-As-YouGo Impact ............. 0 5 5 15 30 40 40 45 45 50 50 95 325 

Increase in long-term direct spending and deficits: CBO estimates that enacting H.R. 2246 would not increase net direct spending or on-budget deficits by more than $5 billion in any of the four 

consecutive 10-year periods beginning in 2028. 

Intergovernmental and private-sector impact: H.R. 2246 contains 

no intergovernmental or private-sector mandates as defined in 

UMRA and would impose no costs on state, local, or tribal governments. 

Estimate prepared by: Federal costs: Robert Reese; Impact on 

state, local, and tribal governments: Rachel Austin; Impact on the 

private sector: Logan Smith. 

Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

15 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

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 the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 2246 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

DUPLICATION OF FEDERAL PROGRAMS

Pursuant to section 3(c)(5) of rule XIII, the Committee states 

that no provision of H.R. 2246 establishes or reauthorizes a program of the Federal Government known to be duplicative of another Federal program, a program that was included in any report 

from the Government Accountability Office to Congress pursuant to 

section 21 of Public Law 111–139, or a program related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, 115th Cong. (2017), the 

Committee states that H.R. 2246 contains no directed rulemaking. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Sec. 1. Short title 

This Act may be cited as the ‘‘Taxpayer Exposure Mitigation Act 

of 2017’’. 

Sec. 2. Opt-out of mandatory coverage requirement for commercial 

properties 

Amends the Flood Disaster Protection Act of 1973 and the National Flood Insurance Act of 1968 to eliminate the NFIP’s mandatory purchase requirement for all commercial and multifamily 

properties, while preserving the eligibility of commercial and multifamily properties to voluntarily purchase NFIP coverage if they so 

choose. Residential properties financed by commercial loans would 

be treated similar to other commercial and multifamily properties. 

Sec. 3. Risk transfer requirement 

No later than 18 months after bill enactment, the FEMA Administrator shall annually cede a portion of the risk of the NFIP to the 

private reinsurance or capital markets, as determined by the Administrator, in an amount that (i) is sufficient to maintain the ability of the program to pay claims; and (ii) manages and limits the 

annual exposure of the NFIP to flood losses in accordance with the 

probably maximum loss target established each such year. The AdVerDate Sep 11 2014 22:36 Jul 27, 2017 Jkt 069006 PO 00000 Frm 00015 Fmt 6659 Sfmt 6602 E:\HR\OC\HR255.XXX HR255
16 

ministrator shall establish the probable maximum loss target for 

the NFIP that is expected to occur such fiscal year. In establishing 

the probably maximum loss target, the Administrator shall consider—(i) the probable maximum loss targets for other U.S. public 

natural catastrophe insurance program, including State wind pools 

and earthquake programs; (ii) the probably maximum loss targets 

of other risk management organization, including the Federal National Mortgage Association and the Federal Home Loan Mortgage 

Corporation; (iii) catastrophic, actuarial, and other appropriate 

data modeling results of the NFIP portfolio; (iv) the availability of 

funds in the National Flood Insurance Fund; (v) the availability of 

funds in the National Flood Insurance Reserve Fund; (vi) the availability of NFIP borrowing authority; (vii) the ability of the Administrator to repay outstanding debt; (viii) amounts appropriated to 

the Administrator to carry out the NFIP; (ix) reinsurance, capital 

markets, catastrophe bonds, collateralized reinsurance, resilience 

bonds, and other insurance-linked securities, and other risk transfer opportunities; and (x) any other factor the Administrator determines appropriate. 

Gives the Administrator the ability to enter into multi-year contracts for reinsurance. 

Sec. 4. Private or community flood maps 

Twelve months after bill enactment, the Technical Mapping Advisory Council (TMAC) shall develop and make recommendations to 

the FEMA Administrator to establish a set of standards, guidelines, and procedures for state and local governments to develop alternative maps. Subject to certification and approval by the Administrator, the map shall be considered the flood insurance rate map 

in effect for all purposes of the NFIP, with respect to the area covered by the map. 

Until the Administrator promulgates regulations implementing 

this section, the Administrator may adopt policies and procedures 

necessary to implement this section without undergoing notice and 

comment rulemaking. 

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, 

and existing law in which no change is proposed is shown in 

roman): 

FLOOD DISASTER PROTECTION ACT OF 1973 

* * * * * * * 

DEFINITIONS

SEC. 3. (a) As used in this Act, unless the context otherwise requires, the term— 

(1) ‘‘community’’ means a State or a political subdivision 

thereof which has zoning and building code jurisdiction over a 

particular area having special flood hazards; 

17 

(2) ‘‘Federal agency’’ means any department, agency, corporation, or other entity or instrumentality of the executive branch 

of the Federal Government, and includes the Federal National 

Mortgage Association and the Federal Home Loan Mortgage 

Corporation; 

(3) ‘‘financial assistance’’ means any form of loan, grant, 

guaranty, insurance, payment, rebate, subsidy, disaster assistance loan or grant, or any other form of direct or indirect Federal assistance, other than general or special revenue sharing 

or formula grants made to States; 

(4) ‘‘financial assistance for acquisition or construction purposes’’ means any form of financial assistance which is intended in whole or in part for the acquisition, construction, reconstruction, repair, or improvement of any publicly or privately owned building or mobile home, and for any machinery, 

equipment fixtures, and furnishings contained or to be contained therein, and shall include the purchase or subsidization 

of mortgages or mortgage loans but shall exclude assistance 

pursuant to the Disaster Relief and Emergency Assistance Act 

(other than assistance under such Act in connection with a 

flood); 

(5) ‘‘Federal entity for lending regulation’’ means the Board 

of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, 

the National Credit Union Administration, and the Farm Credit Administration, and with respect to a particular regulated 

lending institution means the entity primarily responsible for 

the supervision of the institution; 

(6) ‘‘Administrator’’ means the Administrator of the Federal 

Emergency Management Agency; 

(7) ‘‘Federal agency lender’’ means a Federal agency that 

makes direct loans secured by improved real estate or a mobile 

home, to the extent such agency acts in such capacity; 

(8) the term ‘‘improved real estate’’ means real estate upon 

which a building is located; 

(9) ‘‘lender’’ means a regulated lending institution or Federal 

agency lender; 

(10) ‘‘regulated lending institution’’ means any bank, savings 

and loan association, credit union, farm credit bank, Federal 

land bank association, production credit association, or similar 

institution subject to the supervision of a Federal entity for 

lending regulation; øand¿ 

(11) ‘‘servicer’’ means the person responsible for receiving 

any scheduled periodic payments from a borrower pursuant to 

the terms of a loan, including amounts for taxes, insurance 

premiums, and other charges with respect to the property securing the loan, and making the payments of principal and interest and such other payments with respect to the amounts 

received from the borrower as may be required pursuant to the 

terms of the loanø.¿; and 

(12) ‘‘residential improved real estate’’ means improved real 

estate that— 

(A) is primarily used for residential purposes, as defined 

by the Federal entities for lending regulation; and 

18 

(B) secures financing or financial assistance provided 

through a federally related single family loan progam, as 

defined by the Federal entities for lending regulation. 

(b) The Administrator is authorized to define or redefine, by 

rules and regulations, any scientific or technical term used in this 

Act, insofar as such definition is not inconsistent with the purposes 

of this Act. 

TITLE I—EXPANSION OF NATIONAL FLOOD INSURANCE 

PROGRAM 

* * * * * * * 

FLOOD INSURANCE PURCHASE AND COMPLIANCE REQUIREMENTS AND

ESCROW ACCOUNTS

SEC. 102. (a) After the expiration of sixty days following the date 

of enactment of this Act, no Federal officer or agency shall approve 

any financial assistance for acquisition or construction purposes for 

use in any area that has been identified by the Administrator as 

an area having special flood hazards and in which the sale of flood 

insurance has been made available under the National Flood Insurance Act of 1968, unless the building or mobile home and any personal property to which such financial assistance relates is covered 

by flood insurance in an amount at least equal to its development 

or project cost (less estimated land cost) or to the maximum limit 

of coverage made available with respect to the particular type of 

property under the National Flood Insurance Act of 1968, whichever is less: Provided, That if the financial assistance provided is 

in the form of a loan or an insurance or guaranty of a loan, the 

amount of flood insurance required need not exceed the outstanding principal balance of the loan and need not be required beyond the term of the loan. The requirement of maintaining flood insurance shall apply during the life of the property, regardless of 

transfer of ownership of such property. 

(b) REQUIREMENT FOR MORTGAGE LOANS.— 

(1) REGULATED LENDING INSTITUTIONS.—Each Federal entity 

for lending regulation (after consultation and coordination with 

the Financial Institutions Examination Council established 

under the Federal Financial Institutions Examination Council 

Act of 1974) shall by regulation direct regulated lending institutions— 

(A) not to make, increase, extend, or renew any loan secured by residential improved real estate or a mobile home 

located or to be located in an area that has been identified 

by the Administrator as an area having special flood hazards and in which flood insurance has been made available 

under the National Flood Insurance Act of 1968, unless 

the residential building or mobile home and any personal 

property securing such loan is covered for the term of the 

loan by flood insurance in an amount at least equal to the 

outstanding principal balance of the loan or the maximum 

limit of coverage made available under the Act with respect to the particular type of property, whichever is less; 

and 

19 

(B) to accept private flood insurance as satisfaction of 

the flood insurance coverage requirement under subparagraph (A) if the coverage provided by such private flood insurance meets the requirements for coverage under such 

subparagraph. 

(2) FEDERAL AGENCY LENDERS.—A Federal agency lender 

may not make, increase, extend, or renew any loan secured by 

residential improved real estate or a mobile home located or to 

be located in an area that has been identified by the Administrator as an area having special flood hazards and in which 

flood insurance has been made available under the National 

Flood Insurance Act of 1968, unless the residential building or 

mobile home and any personal property securing such loan is 

covered for the term of the loan by flood insurance in the 

amount provided in paragraph (1)(A). Each Federal agency 

lender shall accept private flood insurance as satisfaction of 

the flood insurance coverage requirement under the preceding 

sentence if the flood insurance coverage provided by such private flood insurance meets the requirements for coverage 

under such sentence. Each Federal agency lender shall issue 

any regulations necessary to carry out this paragraph. Such 

regulations shall be consistent with and substantially identical 

to the regulations issued under paragraph (1)(A). 

(3) GOVERNMENT-SPONSORED ENTERPRISES FOR HOUSING.— The Federal National Mortgage Association and the Federal 

Home Loan Mortgage Corporation shall implement procedures 

reasonably designed to ensure that, for any loan that is— 

(A) secured by residential improved real estate or a mobile home located in an area that has been identified, at 

the time of the origination of the loan or at any time during the term of the loan, by the Administrator as an area 

having special flood hazards and in which flood insurance 

is available under the National Flood Insurance Act of 

1968, and 

(B) purchased by such entity, 

the residential building or mobile home and any personal property securing the loan is covered for the term of the loan by 

flood insurance in the amount provided in paragraph (1)(A). 

The Federal National Mortgage Association and the Federal 

Home Loan Mortgage Corporation shall accept private flood insurance as satisfaction of the flood insurance coverage requirement under paragraph (1)(A) if the flood insurance coverage 

provided by such private flood insurance meets the requirements for coverage under such paragraph and any requirements established by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, respectively, relating to the financial solvency, strength, or claimspaying ability of private insurance companies from which the 

Federal National Mortgage Association or the Federal Home 

Loan Mortgage Corporation will accept private flood insurance. 

(4) APPLICABILITY.— (A) EXISTING COVERAGE.—Except as provided in subparagraph (B), paragraph (1) shall apply on the date of enactment of the Riegle Community Development and Regulatory Improvement Act of 1994. 

20 

(B) NEW COVERAGE.—Paragraphs (2) and (3) shall apply 

only with respect to any loan made, increased, extended, 

or renewed after the expiration of the 1-year period beginning on the date of enactment of the Riegle Community 

Development and Regulatory Improvement Act of 1994. 

Paragraph (1) shall apply with respect to any loan made, 

increased, extended, or renewed by any lender supervised 

by the Farm Credit Administration only after the expiration of the period under this subparagraph. 

(C) CONTINUED EFFECT OF REGULATIONS.—Notwithstanding any other provision of this subsection, the regulations to carry out paragraph (1), as in effect immediately 

before the date of enactment of the Riegle Community Development and Regulatory Improvement Act of 1994, shall 

continue to apply until the regulations issued to carry out 

paragraph (1) as amended by section 522(a) of such Act 

take effect. 

(5) RULE OF CONSTRUCTION.—Nothing in this subsection 

shall be construed to supersede or limit the authority of a Federal entity for lending regulation, the Federal Housing Finance 

Agency, a Federal agency lender, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation to establish requirements relating to the financial solvency, strength, or claims-paying ability of private insurance 

companies from which the entity or agency will accept private 

flood insurance. 

(6) NOTICE.— (A) IN GENERAL.—Each lender shall disclose to a borrower that is subject to this subsection that— 

(i) flood insurance is available from private insurance companies that issue standard flood insurance 

policies on behalf of the national flood insurance program or directly from the national flood insurance program; 

(ii) flood insurance that provides the same level of 

coverage as a standard flood insurance policy under 

the national flood insurance program may be available 

from a private insurance company that issues policies 

on behalf of the company; and 

(iii) the borrower is encouraged to compare the flood 

insurance coverage, deductibles, exclusions, conditions 

and premiums associated with flood insurance policies 

issued on behalf of the national flood insurance program and policies issued on behalf of private insurance companies and to direct inquiries regarding the 

availability, cost, and comparisons of flood insurance 

coverage to an insurance agent. 

(B) RULE OF CONSTRUCTION.—Nothing in this paragraph 

shall be construed as affecting or otherwise limiting the 

authority of a Federal entity for lending regulation to approve any disclosure made by a regulated lending institution for purposes of complying with subparagraph (A). 

(7) PRIVATE FLOOD INSURANCE DEFINED.—In this subsection, 

the term ‘‘private flood insurance’’ means an insurance policy 

that— 

21 

(A) is issued by an insurance company that is— 

(i) licensed, admitted, or otherwise approved to engage in the business of insurance in the State or jurisdiction in which the insured building is located, by the 

insurance regulator of that State or jurisdiction; or 

(ii) in the case of a policy of difference in conditions, 

multiple peril, all risk, or other blanket coverage insuring nonresidential commercial property, is recognized, or not disapproved, as a surplus lines insurer by 

the insurance regulator of the State or jurisdiction 

where the property to be insured is located; 

(B) provides flood insurance coverage which is at least as 

broad as the coverage provided under a standard flood insurance policy under the national flood insurance program, 

including when considering deductibles, exclusions, and 

conditions offered by the insurer; 

(C) includes— 

(i) a requirement for the insurer to give 45 days’ 

written notice of cancellation or non-renewal of flood 

insurance coverage to— 

(I) the insured; and 

(II) the regulated lending institution or Federal 

agency lender; 

(ii) information about the availability of flood insurance coverage under the national flood insurance program; 

(iii) a mortgage interest clause similar to the clause 

contained in a standard flood insurance policy under 

the national flood insurance program; and 

(iv) a provision requiring an insured to file suit not 

later than 1 year after date of a written denial of all 

or part of a claim under the policy; and 

(D) contains cancellation provisions that are as restrictive as the provisions contained in a standard flood insurance policy under the national flood insurance program. 

(c) EXCEPTIONS TO PURCHASE REQUIREMENTS.— (1) STATE-OWNED PROPERTY.—Notwithstanding the other provisions of this section, flood insurance shall not be required on 

any State-owned property that is covered under an adequate 

State policy of self-insurance satisfactory to the Administrator. 

The Administrator shall publish and periodically revise the list 

of States to which this subsection applies. 

(2) SMALL LOANS.—Notwithstanding any other provision of 

this section, subsections (a) and (b) shall not apply to any loan 

having— 

(A) an original outstanding principal balance of $5,000 

or less; and 

(B) a repayment term of 1 year or less. 

(3) DETACHED STRUCTURES.—Notwithstanding any other provision of this section, flood insurance shall not be requiredø, in 

the case of any residential property, for any structure that is 

a part of such property¿ for any structure that is part of a residential property but is detached from the primary residential 

structure of such property and does not serve as a residence. 

(d) ESCROW OF FLOOD INSURANCE PAYMENTS.— 

22 

(1) REGULATED LENDING INSTITUTIONS.— 

(A) FEDERAL ENTITIES RESPONSIBLE FOR LENDING REGULATIONS.—Each Federal entity for lending regulation (after 

consultation and coordination with the Federal Financial 

Institutions Examination Council) shall, by regulation, direct that all premiums and fees for flood insurance under 

the National Flood Insurance Act of 1968, for residential 

improved real estate or a mobile home, shall be paid to the 

regulated lending institution or servicer for any loan secured by the residential improved real estate or mobile 

home, with the same frequency as payments on the loan 

are made, for the duration of the loan. Except as provided 

in subparagraph (B), upon receipt of any premiums or fees, 

the regulated lending institution or servicer shall deposit 

such premiums and fees in an escrow account on behalf of 

the borrower. Upon receipt of a notice from the Administrator or the provider of the flood insurance that insurance 

premiums are due, the premiums deposited in the escrow 

account shall be paid to the provider of the flood insurance. 

(B) LIMITATION.—Except as may be required under applicable State law, a Federal entity for lending regulation 

may not direct or require a regulated lending institution to 

deposit premiums or fees for flood insurance under the National Flood Insurance Act of 1968 in an escrow account on 

behalf of a borrower under subparagraph (A)— 

(i) if— 

(I) the regulated lending institution has total 

assets of less than $1,000,000,000; and 

(II) on or before the date of enactment of the 

Biggert-Waters Flood Insurance Reform Act of 

2012, the regulated lending institution— 

(aa) in the case of a loan secured by residential improved real estate or a mobile 

home, was not required under Federal or 

State law to deposit taxes, insurance premiums, fees, or any other charges in an escrow account for the entire term of the loan; 

and 

(bb) did not have a policy of consistently 

and uniformly requiring the deposit of taxes, 

insurance premiums, fees, or any other 

charges in an escrow account for loans secured by residential improved real estate or a 

mobile home; or 

(ii) in the case of a loan that— 

(I) is in a junior or subordinate position to a 

senior lien secured by the same residential improved real estate or mobile home for which flood 

insurance is being provided at the time of the 

origination of the loan; 

(II) is secured by residential improved real estate or a mobile home that is part of a condominium, cooperative, or other project development, 

23 

if the residential improved real estate or mobile 

home is covered by a flood insurance policy that— 

(aa) meets the requirements that the regulated lending institution is required to enforce 

under subsection (b)(1); 

(bb) is provided by the condominium association, cooperative, homeowners association, 

or other applicable group; and 

(cc) the premium for which is paid by the 

condominium association, cooperative, homeowners association, or other applicable group 

as a common expense; 

(III) is secured by residential improved real estate or a mobile home that is used as collateral for 

a business purpose; 

(IV) is a home equity line of credit; 

(V) is a nonperforming loan; or 

(VI) has a term of not longer than 12 months. 

(2) FEDERAL AGENCY LENDERS.—Each Federal agency lender 

shall by regulation require and provide for escrow and payment of any flood insurance premiums and fees relating to residential improved real estate and mobile homes securing loans 

made by the Federal agency lender under the circumstances 

and in the manner provided under paragraph (1). Any regulations issued under this paragraph shall be consistent with and 

substantially identical to the regulations issued under paragraph (1). 

(3) APPLICABILITY OF RESPA.—Escrow accounts established 

pursuant to this subsection shall be subject to the provisions 

of section 10 of the Real Estate Settlement Procedures Act of 

1974. 

(4) DEFINITION.—For purposes of this subsection, the term 

‘‘residential improved real estate’’ means improved real estate 

for which the improvement is a residential building. 

(5) APPLICABILITY.—This subsection shall apply only with respect to any loan made, increased, extended, or renewed after 

the expiration of the 1-year period beginning on the date of enactment of the Riegle Community Development and Regulatory 

Improvement Act of 1994. 

(e) PLACEMENT OF FLOOD INSURANCE BY LENDER.— 

(1) NOTIFICATION TO BORROWER OF LACK OF COVERAGE.—If, 

at the time of origination or at any time during the term of a 

loan secured by residential improved real estate or by a mobile 

home located in an area that has been identified by the Administrator (at the time of the origination of the loan or at any 

time during the term of the loan) as an area having special 

flood hazards and in which flood insurance is available under 

the National Flood Insurance Act of 1968, the lender or 

servicer for the loan determines that the residential building or 

mobile home and any personal property securing the loan is 

not covered by flood insurance or is covered by such insurance 

in an amount less than the amount required for the property 

pursuant to paragraph (1), (2), or (3) of subsection (b), the 

lender or servicer shall notify the borrower under the loan that 

the borrower should obtain, at the borrower’s expense, an 

24 

amount of flood insurance for the residential building or mobile 

home and such personal property that is not less than the 

amount under subsection (b)(1), for the term of the loan. 

(2) PURCHASE OF COVERAGE ON BEHALF OF BORROWER.—If 

the borrower fails to purchase such flood insurance within 45 

days after notification under paragraph (1), the lender or 

servicer for the loan shall purchase the insurance on behalf of 

the borrower and may charge the borrower for the cost of premiums and fees incurred by the lender or servicer for the loan 

in purchasing the insurance, including premiums or fees incurred for coverage beginning on the date on which flood insurance coverage lapsed or did not provide a sufficient coverage 

amount. 

(3) TERMINATION OF FORCE-PLACED INSURANCE.—Within 30 

days of receipt by the lender or servicer of a confirmation of 

a borrower’s existing flood insurance coverage, the lender or 

servicer shall— 

(A) terminate any insurance purchased by the lender or 

servicer under paragraph (2); and 

(B) refund to the borrower all premiums paid by the borrower for any insurance purchased by the lender or 

servicer under paragraph (2) during any period during 

which the borrower’s flood insurance coverage and the insurance coverage purchased by the lender or servicer were 

each in effect, and any related fees charged to the borrower with respect to the insurance purchased by the lender or servicer during such period. 

(4) SUFFICIENCY OF DEMONSTRATION.—For purposes of confirming a borrower’s existing flood insurance coverage, a lender 

or servicer for a loan shall accept from the borrower an insurance policy declarations page that includes the existing flood 

insurance policy number and the identity of, and contact information for, the insurance company or agent. 

(5) REVIEW OF DETERMINATION REGARDING REQUIRED PURCHASE.— 

(A) IN GENERAL.—The borrower and lender for a loan secured by residential improved real estate or a mobile home 

may jointly request the Administrator to review a determination of whether the residential building or mobile 

home is located in an area having special flood hazards. 

Such request shall be supported by technical information 

relating to the residential improved real estate or mobile 

home. Not later than 45 days after the Administrator receives the request, the Administrator shall review the determination and provide to the borrower and the lender 

with a letter stating whether or not the residential building or mobile home is in an area having special flood hazards. The determination of the Administrator shall be 

final. 

(B) EFFECT OF DETERMINATION.—Any person to whom a 

borrower provides a letter issued by the Administrator 

pursuant to subparagraph (A), stating that the residential 

building or mobile home securing the loan of the borrower 

is not in an area having special flood hazards, shall have 

no obligation under this title to require the purchase of 

25 

flood insurance for such residential building or mobile 

home during the period determined by the Administrator 

which shall be specified in the letter and shall begin on 

the date on which such letter is provided. 

(C) EFFECT OF FAILURE TO RESPOND.—If a request under 

subparagraph (A) is made in connection with the origination of a loan and the Administrator fails to provide a letter under subparagraph (A) before the later of (i) the expiration of the 45-day period under such subparagraph, or 

(ii) the closing of the loan, no person shall have an obligation under this title to require the purchase of flood insurance for the residential building or mobile home securing 

the loan until such letter is provided. 

(6) APPLICABILITY.—This subsection shall apply to all loans 

outstanding on or after the date of enactment of the Riegle 

Community Development and Regulatory Improvement Act of 

1994. 

(f) CIVIL MONETARY PENALTIES FOR FAILURE TO REQUIRE FLOOD

INSURANCE OR NOTIFY.— 

(1) CIVIL MONETARY PENALTIES AGAINST REGULATED LENDERS.—Any regulated lending institution that is found to have 

a pattern or practice of committing violations under paragraph 

(2) shall be assessed a civil penalty by the appropriate Federal 

entity for lending regulation in the amount provided under 

paragraph (5). 

(2) LENDER VIOLATIONS.—The violations referred to in paragraph (1) shall include— 

(A) making, increasing, extending, or renewing loans in 

violation of— 

(i) the regulations issued pursuant to subsection (b) 

of this section; 

(ii) the escrow requirements under subsection (d) of 

this section; or 

(iii) the notice requirements under section 1364 of 

the National Flood Insurance Act of 1968; or 

(B) failure to provide notice or purchase flood insurance 

coverage in violation of subsection (e) of this section. 

(3) CIVIL MONETARY PENALTIES AGAINST GSE’S.— 

(A) IN GENERAL.—If the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation 

is found by the Director of the Federal Housing Finance 

Agency to have a pattern or practice of purchasing loans 

in violation of the procedures established pursuant to subsection (b)(3), the Director of such Office shall assess a 

civil penalty against such enterprise in the amount provided under paragraph (5) of this subsection. 

(B) DEFINITION.—For purposes of this subsection, the 

term ‘‘enterprise’’ means the Federal National Mortgage 

Association or the Federal Home Loan Mortgage Corporation. 

(4) NOTICE AND HEARING.—A penalty under this subsection 

may be issued only after notice and an opportunity for a hearing on the record. 

26 

(5) AMOUNT.—A civil monetary penalty under this subsection 

may not exceed $2,000 for each violation under paragraph (2) 

or paragraph (3). 

(6) LENDER COMPLIANCE.—Notwithstanding any State or 

local law, for purposes of this subsection, any regulated lending 

institution that purchases flood insurance or renews a contract 

for flood insurance on behalf of or as an agent of a borrower 

of a loan for which flood insurance is required shall be considered to have complied with the regulations issued under subsection (b). 

(7) EFFECT OF TRANSFER ON LIABILITY.—Any sale or other 

transfer of a loan by a regulated lending institution that has 

committed a violation under paragraph (1), that occurs subsequent to the violation, shall not affect the liability of the transferring lender with respect to any penalty under this subsection. A lender shall not be liable for any violations relating 

to a loan committed by another regulated lending institution 

that previously held the loan. 

(8) DEPOSIT OF PENALTIES.—Any penalties collected under 

this subsection shall be paid into the National Flood Mitigation 

Fund under section 1367 of the National Flood Insurance Act 

of 1968. 

(9) ADDITIONAL PENALTIES.—Any penalty under this subsection shall be in addition to any civil remedy or criminal penalty otherwise available. 

(10) STATUTE OF LIMITATIONS.—No penalty may be imposed 

under this subsection after the expiration of the 4-year period 

beginning on the date of the occurrence of the violation for 

which the penalty is authorized under this subsection. 

(g) OTHER ACTIONS TO REMEDY PATTERN OF NONCOMPLIANCE.— 

(1) AUTHORITY OF FEDERAL ENTITIES FOR LENDING REGULATION.—A Federal entity for lending regulation may require a 

regulated lending institution to take such remedial actions as 

are necessary to ensure that the regulated lending institution 

complies with the requirements of the national flood insurance 

program if the Federal agency for lending regulation makes a 

determination under paragraph (2) regarding the regulated 

lending institution. 

(2) DETERMINATION OF VIOLATIONS.—A determination under 

this paragraph shall be a finding that— 

(A) the regulated lending institution has engaged in a 

pattern and practice of noncompliance in violation of the 

regulations issued pursuant to subsection (b), (d), or (e) or 

the notice requirements under section 1364 of the National 

Flood Insurance Act of 1968; and 

(B) the regulated lending institution has not demonstrated measurable improvement in compliance despite 

the assessment of civil monetary penalties under subsection (f). 

(h) FEE FOR DETERMINING LOCATION.—Notwithstanding any 

other Federal or State law, any person who makes a loan secured 

by residential improved real estate or a mobile home or any 

servicer for such a loan may charge a reasonable fee for the costs 

of determining whether the residential building or mobile home seVerDate Sep 11 2014 22:36 Jul 27, 2017 Jkt 069006 PO 00000 Frm 00026 Fmt 6659 Sfmt 6601 E:\HR\OC\HR255.XXX HR255
27 

curing the loan is located in an area having special flood hazards, 

but only in accordance with the following requirements: 

(1) BORROWER FEE.—The borrower under such a loan may be 

charged the fee, but only if the determination— 

(A) is made pursuant to the making, increasing, extending, or renewing of the loan that is initiated by the borrower; 

(B) is made pursuant to a revision or updating under 

section 1360(f) of the floodplain areas and flood-risk zones 

or publication of a notice or compendia under subsection 

(h) or (i) of section 1360 that affects the area in which the 

residential improved real estate or mobile home securing 

the loan is located or that, in the determination of the Administrator, may reasonably be considered to require a determination under this subsection; or 

(C) results in the purchase of flood insurance coverage 

pursuant to the requirement under subsection (e)(2). 

(2) PURCHASER OR TRANSFEREE FEE.—The purchaser or 

transferee of such a loan may be charged the fee in the case 

of sale or transfer of the loan. 

* * * * * * * 

NATIONAL FLOOD INSURANCE ACT OF 1968 

* * * * * * * 

TITLE XIII—NATIONAL FLOOD INSURANCE 

* * * * * * * 

CHAPTER II—ORGANIZATION AND ADMINISTRATION OF 

THE FLOOD INSURANCE PROGRAM 

* * * * * * * 

PART C—PROVISIONS OF GENERAL APPLICABILITY

SERVICES BY INSURANCE INDUSTRY

SEC. 1345. (a) In administering the flood insurance program 

under this chapter, the Administrator is authorized to enter into 

any contracts, agreements, or other appropriate arrangements 

which may, from time to time, be necessary for the purpose of utilizing, on such terms and conditions as may be agreed upon, the 

facilities and services of any insurance companies or other insurers, 

insurance agents and brokers, or insurance adjustment organizations; and such contracts, agreements, or arrangements may include provision for payment of applicable operating costs and allowances for such facilities and services as set forth in the schedules 

prescribed under section 1311. 

(b) Any such contracts, agreements, or other arrangements may 

be entered into without regard to the provisions of section 3709 of 

the Revised Statutes (41 U.S.C. 5) or any other provisions of law 

requiring competitive bidding and without regard to the provisions 

of the Federal Advisory Committee Act (5 U.S.C. App.). 

28 

(c) The Administrator of the Federal Emergency Management 

Agency shall hold any agent or broker selling or undertaking to sell 

flood insurance under this title harmless from any judgment for 

damages against such agent or broker as a result of any court action by a policyholder or applicant arising out of an error or omission on the part of the Federal Emergency Management Agency, 

and shall provide any such agent or broker with indemnification, 

including court costs and reasonable attorney fees, arising out of 

and caused by an error or omission on the part of the Federal 

Emergency Management Agency and its contractors. The Administrator of the Federal Emergency Management Agency may not hold 

harmless or indemnify an agent or broker for his or her error or 

omission. 

(d) FEMA AUTHORITY ON TRANSFER OF POLICIES.—Notwithstanding any other provision of this title, the Administrator may, 

at the discretion of the Administrator, refuse to accept the transfer 

of the administration of policies for coverage under the flood insurance program under this title that are written and administered by 

any insurance company or other insurer, or any insurance agent or 

broker. 

(e) RISK TRANSFER.— 

(1) AUTHORITY.—The Administrator may secure reinsurance 

of coverage provided by the flood insurance program from the 

private reinsurance and capital markets at rates and on terms 

determined by the Administrator to be reasonable and appropriate, in an amount sufficient to maintain the ability of the 

program to pay claims. 

(2) REQUIRED RISK TRANSFER COVERAGE.— 

(A) REQUIREMENT.—Not later than the expiration of the 

18-month period beginning upon the date of the enactment 

of this paragraph and at all times thereafter, the Administrator shall annually cede a portion of the risk of the flood 

insurance program under this title to the private reinsurance or capital markets, or any combination thereof, and at 

rates and terms that the Administrator determines to be 

reasonable and appropriate, in an amount that— 

(i) is sufficient to maintain the ability of the program 

to pay claims; and 

(ii) manages and limits the annual exposure of the 

flood insurance program to flood losses in accordance 

with the probable maximum loss target established for 

such year under subparagraph (B). 

(B) PROBABLE MAXIMUM LOSS TARGET.—The Administrator shall for each fiscal year, establish a probable maximum loss target for the national flood insurance program 

that shall be the maximum probable loss under the national flood insurance program that is expected to occur in 

such fiscal year. 

(C) CONSIDERATIONS.—In establishing the probable maximum loss target under subparagraph (B) for each fiscal 

year and carrying out subparagraph (A), the Administrator 

shall consider— 

(i) the probable maximum loss targets for other 

United States public natural catastrophe insurance 

29 

programs, including as State wind pools and earthquake programs; 

(ii) the probable maximum loss targets of other risk 

management organizations, including the Federal National Mortgage Association and the Federal Home 

Loan Mortgage Corporation; 

(iii) catastrophic, actuarial, and other appropriate 

data modeling results of the national flood insurance 

program portfolio; 

(iv) the availability of funds in the National Flood 

Insurance Fund established under section 1310 (42 

U.S.C. 4017); 

(v) the availability of funds in the National Flood Insurance Reserve Fund established under section 1310A 

(42 U.S.C. 4017a); 

(vi) the availability of borrowing authority under section 1309 (42 U.S.C. 4016); 

(vii) the ability of the Administrator to repay outstanding debt; 

(viii) amounts appropriated to the Administrator to 

carry out the national flood insurance program; 

(ix) reinsurance, capital markets, catastrophe bonds, 

collateralized reinsurance, resilience bonds, and other 

insurance-linked securities, and other risk transfer opportunities; and 

(x) any other factor the Administrator determines appropriate. 

(D) MULTI-YEAR CONTRACTS.—Nothing in this paragraph 

may be construed to prevent or prohibit the Administrator 

from complying with the requirement under subparagraph 

(A) regarding ceding risk through contracts having a duration longer than one year. 

* * * * * * * 

CHAPTER III—COORDINATION OF FLOOD INSURANCE WITH 

LAND-MANAGEMENT PROGRAMS IN FLOOD-PRONE AREAS 

IDENTIFICATION OF FLOOD-PRONE AREAS

SEC. 1360. (a) The Administrator øis authorized to consult¿ is 

authorized— 

(1) to consult with, receive information from, and enter into 

any agreements or other arrangements with the Secretaries of 

the Army, the Interior, Agriculture, and Commerce, the Tennessee Valley Authority, and the heads of other Federal departments or agencies, on a reimbursement basis, or with the 

head of any State or local agency, or enter into contracts with 

any persons or private firms, in order that he may— 

ø(1)¿ (A) identify and publish information with respect 

to all flood plain areas, including coastal areas located in 

the United States, which have special flood hazards, within five years following the date of the enactment of this 

Act, and 

ø(2)¿ (B) establish or update flood-risk zone data in all 

such areas, and make estimates with respect to the rates 

30 

of probable flood caused loss for the various flood risk 

zones for each of these areas until the date specified in 

section 1319ø.¿; and 

(2) to receive proposed alternative maps from communities developed pursuant to standards and requirements recommended 

by the Technical Mapping Advisory Council, as required by section 100215(m) of the Biggert-Waters Flood Insurance Reform 

Act of 2012 (42 U.S.C. 4101a(m)) and adopted by the Administrator as required by section 100216(c)(3) of such Act (42 U.S.C. 

4101b(c)(3)), so that the Administrator may— 

(A) publish information with respect to all flood plain 

areas, including coastal areas located in the United States, 

which have special flood hazards, and 

(B) establish or update flood-risk zone data in all such 

areas, and make estimates with respect to the rates of probable flood caused loss for the various flood risk zones for 

each of these areas until the date specified in section 1319. 

(b) The Administrator is directed to accelerate the identification 

of risk zones within flood-prone and mudslide-prone areas, as provided by subsection (a)(2) of this section, in order to make known 

the degree of hazard within each such zone at the earliest possible 

date. To accomplish this objective, the Administrator is authorized, 

without regard to subsections (a) and (b) of section 3324 of title 31, 

United States Code, and section 3709 of the Revised Statutes (41 

U.S.C. 5), to make grants, provide technical assistance, and enter 

into contracts, cooperative agreements, or other transactions, on 

such terms as he may deem appropriate, or consent to modifications thereof, and to make advance or progress payments in connection therewith. 

(c) The Secretary of Defense (through the Army Corps of Engineers), the Secretary of the Interior (through the United States Geological Survey), the Secretary of Agriculture (through the Soil 

Conservation Service), the Secretary of Commerce (through the National Oceanic and Atmospheric Administration), the head of the 

Tennessee Valley Authority, and the heads of all other Federal 

agencies engaged in the identification or delineation of flood-risk 

zones within the several States shall, in consultation with the Administrator, give the highest practicable priority in the allocation 

of available manpower and other available resources to the identification and mapping of flood hazard areas and flood-risk zones, in 

order to assist the Administrator to meet the deadline established 

by this section. 

(d) The Administrator shall, not later than September 30, 1984, 

submit to the Congress a plan for bringing all communities containing flood-risk zones into full program status by September 30, 

1987. 

(e) REVIEW OF FLOOD MAPS.—Once during each 5-year period 

(the 1st such period beginning on the date of enactment of the Riegle Community Development and Regulatory Improvement Act of 

1994) or more often as the Administrator determines necessary, the 

Administrator shall assess the need to revise and update all floodplain areas and flood risk zones identified, delineated, or established under this section, based on an analysis of all natural hazards affecting flood risks. 

31 

(f) UPDATING FLOOD MAPS.—The Administrator shall revise and 

update any floodplain areas and flood-risk zones— 

(1) upon the determination of the Administrator, according to 

the assessment under subsection (e), that revision and updating are necessary for the areas and zones; or 

(2) upon the request from any State or local government 

stating that specific floodplain areas or flood-risk zones in the 

State or locality need revision or updating, if sufficient technical data justifying the request is submitted and the unit of 

government making the request agrees to provide funds in an 

amount determined by the Administrator. 

(g) AVAILABILITY OF FLOOD MAPS.—To promote compliance with 

the requirements of this title, the Administrator shall make flood 

insurance rate maps and related information available free of 

charge to the Federal entities for lending regulation, Federal agency lenders, State agencies directly responsible for coordinating the 

national flood insurance program, and appropriate representatives 

of communities participating in the national flood insurance program, and at a reasonable cost to all other persons. Any receipts 

resulting from this subsection shall be deposited in the National 

Flood Insurance Fund, pursuant to section 1310(b)(6). 

(h) NOTIFICATION OF FLOOD MAP CHANGES.—The Administrator 

shall cause notice to be published in the Federal Register (or shall 

provide notice by another comparable method) of any change to 

flood insurance map panels and any change to flood insurance map 

panels issued in the form of a letter of map amendment or a letter 

of map revision. Such notice shall be published or otherwise provided not later than 30 days after the map change or revision becomes effective. Notice by any method other than publication in the 

Federal Register shall include all pertinent information, provide for 

regular and frequent distribution, and be at least as accessible to 

map users as notice in the Federal Register. All notices under this 

subsection shall include information on how to obtain copies of the 

changes or revisions. 

(i) COMPENDIA OF FLOOD MAP CHANGES.—Every 6 months, the 

Administrator shall publish separately in their entirety within a 

compendium, all changes and revisions to flood insurance map panels and all letters of map amendment and letters of map revision 

for which notice was published in the Federal Register or otherwise 

provided during the preceding 6 months. The Administrator shall 

make such compendia available, free of charge, to Federal entities 

for lending regulation, Federal agency lenders, and States and communities participating in the national flood insurance program pursuant to section 1310 and at cost to all other parties. Any receipts 

resulting from this subsection shall be deposited in the National 

Flood Insurance Fund, pursuant to section 1310(b)(6). 

(j) PROVISION OF INFORMATION.—In the implementation of revisions to and updates of flood insurance rate maps, the Administrator shall share information, to the extent appropriate, with the 

Under Secretary of Commerce for Oceans and Atmosphere and representatives from State coastal zone management programs. 

* * * * * * * 

32 

NOTICE REQUIREMENTS

SEC. 1364. (a) NOTIFICATION OF SPECIAL FLOOD HAZARDS.— 

(1) REGULATED LENDING INSTITUTIONS.—Each Federal entity 

for lending regulation (after consultation and coordination with 

the Financial Institutions Examination Council) shall by regulation require regulated lending institutions, as a condition of 

making, increasing, extending, or renewing any loan secured 

by residential improved real estate or a mobile home that the 

regulated lending institution determines is located or is to be 

located in an area that has been identified by the Administrator under this title or the Flood Disaster Protection Act of 

1973 as an area having special flood hazards, to notify the purchaser or lessee (or obtain satisfactory assurances that the seller or lessor has notified the purchaser or lessee) and the 

servicer of the loan of such special flood hazards, in writing, 

a reasonable period in advance of the signing of the purchase 

agreement, lease, or other documents involved in the transaction. The regulations shall also require that the regulated 

lending institution retain a record of the receipt of the notices 

by the purchaser or lessee and the servicer. 

(2) FEDERAL AGENCY LENDERS.—Each Federal agency lender 

shall by regulation require notification in the manner provided 

under paragraph (1) with respect to any loan that is made by 

the Federal agency lender and secured by residential improved 

real estate or a mobile home located or to be located in an area 

that has been identified by the Administrator under this title 

or the Flood Disaster Protection Act of 1973 as an area having 

special flood hazards. Any regulations issued under this paragraph shall be consistent with and substantially identical to 

the regulations issued under paragraph (1). 

(3) CONTENTS OF NOTICE.—Written notification required 

under this subsection shall include— 

(A) a warning, in a form to be established by the Administrator, stating that the residential building on the improved real estate securing the loan is located, or the mobile home securing the loan is or is to be located, in an 

area having special flood hazards; 

(B) a description of the flood insurance purchase requirements under section 102(b) of the Flood Disaster Protection Act of 1973; 

(C) a statement that flood insurance coverage may be 

purchased under the national flood insurance program and 

is also available from private insurers, as required under 

section 102(b)(6) of the Flood Disaster Protection Act of 

1973 (42 U.S.C. 4012a(b)(6)); and 

(D) any other information that the Administrator considers necessary to carry out the purposes of the national 

flood insurance program. 

(b) NOTIFICATION OF CHANGE OF SERVICER.— 

(1) LENDING INSTITUTIONS.—Each Federal entity for lending 

regulation (after consultation and coordination with the Financial Institutions Examination Council) shall by regulation require regulated lending institutions, in connection with the 

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33 

ring any loan described in subsection (a)(1), to notify the Administrator (or the designee of the Administrator) in writing 

during the term of the loan of the servicer of the loan. Such 

institutions shall also notify the Administrator (or such designee) of any change in the servicer of the loan, not later than 

60 days after the effective date of such change. The regulations 

under this subsection shall provide that upon any change in 

the servicing of a loan, the duty to provide notification under 

this subsection shall transfer to the transferee servicer of the 

loan. 

(2) FEDERAL AGENCY LENDERS.—Each Federal agency lender 

shall by regulation provide for notification in the manner provided under paragraph (1) with respect to any loan described 

in subsection (a)(1) that is made by the Federal agency lender. 

Any regulations issued under this paragraph shall be consistent with and substantially identical to the regulations 

issued under paragraph (1) of this subsection. 

(c) NOTIFICATION OF EXPIRATION OF INSURANCE.—The Administrator (or the designee of the Administrator) shall, not less than 45 

days before the expiration of any contract for flood insurance under 

this title, issue notice of such expiration by first class mail to the 

owner of the property covered by the contract, the servicer of any 

loan secured by the property covered by the contract, and (if known 

to the Administrator) the owner of the loan. 

STANDARD HAZARD DETERMINATION FORMS

SEC. 1365. (a) DEVELOPMENT.—The Administrator, in consultation with representatives of the mortgage and lending industry, the 

Federal entities for lending regulation, the Federal agency lenders, 

and any other appropriate individuals, shall develop a standard 

form for determining, in the case of a loan secured by residential 

improved real estate or a mobile home, whether the residential 

building or mobile home is located in an area identified by the Administrator as an area having special flood hazards and in which 

flood insurance under this title is available. The form shall be established by regulations issued not later than 270 days after the 

date of enactment of the Riegle Community Development and Regulatory Improvement Act of 1994. 

(b) DESIGN AND CONTENTS.— (1) PURPOSE.—The form under subsection (a) shall be designed to facilitate compliance with the flood insurance purchase requirements of this title. 

(2) CONTENTS.—The form shall require identification of the 

type of flood-risk zone in which the residential building or mobile home is located, the complete map and panel numbers for 

the residential improved real estate or property on which the 

mobile home is located, the community identification number 

and community participation status (for purposes of the national flood insurance program) of the community in which the 

residential improved real estate or such property is located, 

and the date of the map used for the determination, with respect to flood hazard information on file with the Administrator. If the residential building or mobile home is not located 

in an area having special flood hazards the form shall require 

a statement to such effect and shall indicate the complete map 

34 

and panel numbers of the residential improved real estate or 

property on which the mobile home is located. If the complete 

map and panel numbers are not available because the residential building or mobile home is not located in a community that 

is participating in the national flood insurance program or because no map exists for the relevant area, the form shall require a statement to such effect. The form shall provide for inclusion or attachment of any relevant documents indicating revisions or amendments to maps. 

(c) REQUIRED USE.—The Federal entities for lending regulation 

shall by regulation require the use of the form under this section 

by regulated lending institutions. Each Federal agency lender shall 

by regulation provide for the use of the form with respect to any 

loan made by such Federal agency lender. The Federal National 

Mortgage Association and the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association shall 

require the use of the form with respect to any loan purchased by 

such entities. A lender or other person may comply with the requirement under this subsection by using the form in a printed, 

computerized, or electronic manner. 

(d) GUARANTEES REGARDING INFORMATION.—In providing information regarding special flood hazards on the form developed 

under this section, any lender (or other person required to use the 

form) who makes, increases, extends, or renews a loan secured by 

residential improved real estate or a mobile home may provide for 

the acquisition or determination of such information to be made by 

a person other than such lender (or other person), only to the extent such person guarantees the accuracy of the information. 

(e) RELIANCE ON PREVIOUS DETERMINATION.—Any person increasing, extending, renewing, or purchasing a loan secured by residential improved real estate or a mobile home may rely on a previous determination of whether the residential building or mobile 

home is located in an area having special flood hazards (and shall 

not be liable for any error in such previous determination), if the 

previous determination was made not more than 7 years before the 

date of the transaction and the basis for the previous determination has been set forth on a form under this section, unless— 

(1) map revisions or updates pursuant to section 1360(f) after 

such previous determination have resulted in the residential 

building or mobile home being located in an area having special flood hazards; or 

(2) the person contacts the Administrator to determine when 

the most recent map revisions or updates affecting such property occurred and such revisions and updates have occurred 

after such previous determination. 

(f) EFFECTIVE DATE.—The regulations under this section requiring use of the form established pursuant to this section shall be 

issued together with the regulations required under subsection (a) 

and shall take effect upon the expiration of the 180-day period beginning on such issuance. 

* * * * * * * 

35 

CHAPTER IV—APPROPRIATIONS AND MISCELLANEOUS 

PROVISIONS 

DEFINITIONS

SEC. 1370. (a) As used in this title— 

(1) the term ‘‘flood’’ shall have such meaning as may be prescribed in regulations of the Administrator, and may include 

inundation from rising waters or from the overflow of streams, 

rivers, or other bodies of water, or from tidal surges, abnormally high tidal water, tidal waves, tsunamis, hurricanes, or 

other severe storms or deluge; 

(2) the terms ‘‘United States’’ (when used in a geographic 

sense) and ‘‘State’’ includes the several States, the District of 

Columbia, the territories and possessions, the Commonwealth 

of Puerto Rico, and the Trust Territory of the Pacific Islands; 

(3) the terms ‘‘insurance company’’, ‘‘other insurer’’ and ‘‘insurance agent or broker’’ include any organization or person 

that is authorized to engage in the business of insurance under 

the laws of any State, subject to the reporting requirements of 

the Securities Exchange Act of 1934 pursuant to section 13(a) 

or 15(d) of such Act (15 U.S.C. 78m(a) and 78o(d)), or authorized by the Administrator to assume reinsurance on risks insured by the flood insurance program; 

(4) the term ‘‘insurance adjustment organization’’ includes 

any organizations and persons engaged in the business of adjusting loss claims arising under insurance policies issued by 

any insurance company or other insurer; 

(5) the term ‘‘person’’ includes any individual or group of individuals, corporation, partnership, association, or any other 

organized group of persons, including State and local governments and agencies thereof; 

(6) the term ‘‘Administrator’’ means the Administrator of the 

Federal Emergency Management Agency; 

(7) the term ‘‘repetitive loss structure’’ means a structure 

covered by a contract for flood insurance that— 

(A) has incurred flood-related damage on 2 occasions, in 

which the cost of repair, on the average, equaled or exceeded 25 percent of the value of the structure at the time of 

each such flood event; and 

(B) at the time of the second incidence of flood-related 

damage, the contract for flood insurance contains increased cost of compliance coverage. 

(8) the term ‘‘Federal agency lender’’ means a Federal agency 

that makes direct loans secured by residential improved real 

estate or a mobile home, to the extent such agency acts in such 

capacity; 

(9) the term ‘‘Federal entity for lending regulation’’ means 

the Board of Governors of the Federal Reserve System, the 

Federal Deposit Insurance Corporation, the Comptroller of the 

Currency, the National Credit Union Administration, and the 

Farm Credit Administration, and with respect to a particular 

regulated lending institution means the entity primarily responsible for the supervision of the institution; 

(10) the term ‘‘improved real estate’’ means real estate upon 

which a building is located; 

36 

(11) the term ‘‘lender’’ means a regulated lending institution 

or Federal agency lender; 

(12) the term ‘‘natural and beneficial floodplain functions’’ 

means— 

(A) the functions associated with the natural or relatively undisturbed floodplain that (i) moderate flooding, 

retain flood waters, reduce erosion and sedimentation, and 

mitigate the effect of waves and storm surge from storms, 

and (ii) reduce flood related damage; and 

(B) ancillary beneficial functions, including maintenance 

of water quality and recharge of ground water, that reduce 

flood related damage; 

(13) the term ‘‘regulated lending institution’’ means any 

bank, savings and loan association, credit union, farm credit 

bank, Federal land bank association, production credit association, or similar institution subject to the supervision of a Federal entity for lending regulation; 

(14) the term ‘‘residential improved real estate’’ means improved real estate that— 

(A) is primarily used for residential purposes, as defined 

by the Federal entities for lending regulation; and 

(B) secures financing or financial assistance provided 

through a federally related single family loan progam, as 

defined by the Federal entities for lending regulation; 

ø(14)¿ (15) the term ‘‘servicer’’ means the person responsible 

for receiving any scheduled periodic payments from a borrower 

pursuant to the terms of a loan, including amounts for taxes, 

insurance premiums, and other charges with respect to the 

property securing the loan, and making the payments of principal and interest and such other payments with respect to the 

amounts received from the borrower as may be required pursuant to the terms of the loan; and 

ø(15)¿ (16) 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 Administrator, or by a community ordinance, whichever is lower. 

(b) The term ‘‘flood’’ shall also include inundation from mudslides 

which are proximately caused by accumulations of water on or 

under the ground; and all of the provisions of this title shall apply 

with respect to such mudslides in the same manner and to the 

same extent as with respect to floods described in subsection (a)(1), 

subject to and in accordance with such regulations, modifying the 

provisions of this title (including the provisions relating to land 

management and use) to the extent necessary to insure that they 

can be effectively so applied, as the Administrator may prescribe 

to achieve (with respect to such mudslides) the purposes of this 

title and the objectives of the program. 

(c) The term ‘‘flood’’ shall also include the collapse or subsidence 

of land along the shore of a lake or other body of water as a result 

of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels, and all of the provisions of this 

title shall apply with respect to such collapse or subsidence in the 

same manner and to the same extent as with respect to floods described in subsection (a)(1), subject to and in accordance with such 

37 

regulations, modifying the provisions of this title (including the 

provisions relating to land management and use) to the extent necessary to insure that they can be effectively so applied, as the Administrator may prescribe to achieve (with respect to such collapse 

or subsidence) the purposes of this title and the objectives of the 

program. 

* * * * * * * 

BIGGERT-WATERS FLOOD INSURANCE REFORM ACT OF 

2012 

* * * * * * * 

DIVISION F—MISCELLANEOUS 

* * * * * * * 

TITLE II—FLOOD INSURANCE 

Subtitle A—Flood Insurance Reform and 

Modernization 

* * * * * * * 

SEC. 100215. TECHNICAL MAPPING ADVISORY COUNCIL. 

(a) ESTABLISHMENT.—There is established a council to be known 

as the Technical Mapping Advisory Council (in this section referred 

to as the ‘‘Council’’). 

(b) MEMBERSHIP.— (1) IN GENERAL.—The Council shall consist of— 

(A) the Administrator (or the designee thereof); 

(B) the Secretary of the Interior (or the designee thereof); 

(C) the Secretary of Agriculture (or the designee thereof); 

(D) the Under Secretary of Commerce for Oceans and 

Atmosphere (or the designee thereof); and 

(E) 16 additional members appointed by the Administrator or the designee of the Administrator, who shall be— 

(i) a member of a recognized professional surveying 

association or organization; 

(ii) a member of a recognized professional mapping 

association or organization; 

(iii) a member of a recognized professional engineering association or organization; 

(iv) a member of a recognized professional association or organization representing flood hazard determination firms; 

(v) a representative of the United States Geological 

Survey; 

(vi) a representative of a recognized professional association or organization representing State geographic information; 

38 

(vii) a representative of State national flood insurance coordination offices; 

(viii) a representative of the Corps of Engineers; 

(ix) a member of a recognized regional flood and 

storm water management organization; 

(x) 2 representatives of different State government 

agencies that have entered into cooperating technical 

partnerships with the Administrator and have demonstrated the capability to produce flood insurance 

rate maps; 

(xi) 2 representatives of different local government 

agencies that have entered into cooperating technical 

partnerships with the Administrator and have demonstrated the capability to produce flood insurance 

maps; 

(xii) a member of a recognized floodplain management association or organization; 

(xiii) a member of a recognized risk management association or organization; and 

(xiv) a State mitigation officer. 

(2) QUALIFICATIONS.—Members of the Council shall be appointed based on their demonstrated knowledge and competence regarding surveying, cartography, remote sensing, geographic information systems, or the technical aspects of preparing and using flood insurance rate maps. In appointing 

members under paragraph (1)(E), the Administrator shall, to 

the maximum extent practicable, ensure that the membership 

of the Council has a balance of Federal, State, local, tribal, and 

private members, and includes geographic diversity, including 

representation from areas with coastline on the Gulf of Mexico 

and other States containing areas identified by the Administrator as at high risk for flooding or as areas having special 

flood hazards. 

(c) DUTIES.—The Council shall— 

(1) recommend to the Administrator how to improve in a 

cost-effective manner the— 

(A) accuracy, general quality, ease of use, and distribution and dissemination of flood insurance rate maps and 

risk data; and 

(B) performance metrics and milestones required to effectively and efficiently map flood risk areas in the United 

States; 

(2) recommend to the Administrator mapping standards and 

guidelines for— 

(A) flood insurance rate maps; and 

(B) data accuracy, data quality, data currency, and data 

eligibility; 

(3) recommend to the Administrator how to maintain, on an 

ongoing basis, flood insurance rate maps and flood risk identification; 

(4) recommend procedures for delegating mapping activities 

to State and local mapping partners; 

(5) recommend to the Administrator and other Federal agencies participating in the Council— 

39 

(A) methods for improving interagency and intergovernmental coordination on flood mapping and flood risk determination; and 

(B) a funding strategy to leverage and coordinate budgets and expenditures across Federal agencies; øand¿ 

(6) recommend to the Administrator methods or actions to 

make the flood mapping processes more efficient; 

(7) recommend to the Administrator methods or actions to 

minimize any cost, data, and paperwork requirements of the 

flood mapping processes; 

(8) assist communities, and in particular smaller communities, in locating the resources required to participate in the 

development of flood elevations and flood hazard area designations; and 

ø(6)¿ (9) submit an annual report to the Administrator that 

contains— 

(A) a description of the activities of the Council; 

(B) an evaluation of the status and performance of flood 

insurance rate maps and mapping activities to revise and 

update flood insurance rate maps, as required under section 100216; and 

(C) a summary of recommendations made by the Council 

to the Administrator. 

(d) FUTURE CONDITIONS RISK ASSESSMENT AND MODELING RE- PORT.— 

(1) IN GENERAL.—The Council shall consult with scientists 

and technical experts, other Federal agencies, States, and local 

communities to— 

(A) develop recommendations on how to— 

(i) ensure that flood insurance rate maps incorporate 

the best available climate science to assess flood risks; 

and 

(ii) ensure that the Federal Emergency Management 

Agency uses the best available methodology to consider the impact of— 

(I) the rise in the sea level; and 

(II) future development on flood risk; and 

(B) not later than 1 year after the date of enactment of 

this Act, prepare written recommendations in a future conditions risk assessment and modeling report and to submit 

such recommendations to the Administrator. 

(2) RESPONSIBILITY OF THE ADMINISTRATOR.—The Administrator, as part of the ongoing program to review and update 

National Flood Insurance Program rate maps under section 

100216, shall incorporate any future risk assessment submitted under paragraph (1)(B) in any such revision or update. 

(e) CHAIRPERSON.—The members of the Council shall elect 1 

member to serve as the chairperson of the Council (in this section 

referred to as the ‘‘Chairperson’’). 

(f) COORDINATION.—To ensure that the Council’s recommendations are consistent, to the maximum extent practicable, with national digital spatial data collection and management standards, 

the Chairperson shall consult with the Chairperson of the Federal 

Geographic Data Committee (established pursuant to Office of 

Management and Budget Circular A-16). 

40 

(g) COMPENSATION.—Members of the Council shall receive no additional compensation by reason of their service on the Council. 

(h) MEETINGS AND ACTIONS.— (1) IN GENERAL.—The Council shall meet not less frequently 

than twice each year at the request of the Chairperson or a 

majority of its members, and may take action by a vote of the 

majority of the members. 

(2) INITIAL MEETING.—The Administrator, or a person designated by the Administrator, shall request and coordinate the 

initial meeting of the Council. 

(i) OFFICERS.—The Chairperson may appoint officers to assist in 

carrying out the duties of the Council under subsection (c). 

(j) STAFF.— 

(1) STAFF OF FEMA.—Upon the request of the Chairperson, 

the Administrator may detail, on a nonreimbursable basis, personnel of the Federal Emergency Management Agency to assist 

the Council in carrying out its duties. 

(2) STAFF OF OTHER FEDERAL AGENCIES.—Upon request of the 

Chairperson, any other Federal agency that is a member of the 

Council may detail, on a nonreimbursable basis, personnel to 

assist the Council in carrying out its duties. 

(k) POWERS.—In carrying out this section, the Council may hold 

hearings, receive evidence and assistance, provide information, and 

conduct research, as it considers appropriate. 

(l) REPORT TO CONGRESS.—The Administrator, on an annual 

basis, shall report to the Committee on Banking, Housing, and 

Urban Affairs of the Senate, the Committee on Financial Services 

of the House of Representatives, and the Office of Management and 

Budget on the— 

(1) recommendations made by the Council; 

(2) actions taken by the Federal Emergency Management 

Agency to address such recommendations to improve flood insurance rate maps and flood risk data; and 

(3) any recommendations made by the Council that have 

been deferred or not acted upon, together with an explanatory 

statement. 

(m) COMMUNITY FLOOD MAPS.— (1) STANDARDS AND PROCEDURES.—In addition to the other 

duties of the Council under this section, not later than the expiration of the 12-month period beginning on the date of the enactment of this subsection, the Council shall recommend to the 

Administrator standards and requirements for chief executive 

officers, or entities designated by chief executive officers, of 

States and communities participating in the National Flood Insurance Program to use in mapping flood hazards located in 

States and communities that choose to develop alternative maps 

to the flood insurance rate maps developed by the Agency. The 

recommended standards and requirements shall include procedures for providing notification and appeal rights to individuals within the communities of the proposed flood elevation determinations. 

(2) EXEMPTION FROM RULEMAKING.—Until such time as the 

Administrator promulgates regulations implementing paragraph (1) of this subsection, the Administrator may, notwithstanding any other provision of law, adopt policies and proceVerDate Sep 11 2014 22:36 Jul 27, 2017 Jkt 069006 PO 00000 Frm 00040 Fmt 6659 Sfmt 6603 E:\HR\OC\HR255.XXX HR255
41 

dures necessary to implement such paragraphs without undergoing notice and comment rulemaking and without conducting 

regulatory analyses otherwise required by statute, regulation, or 

executive order. 

SEC. 100216. NATIONAL FLOOD MAPPING PROGRAM. 

(a) REVIEWING, UPDATING, AND MAINTAINING MAPS.—The Administrator, in coordination with the Technical Mapping Advisory 

Council established under section 100215, shall establish an ongoing program under which the Administrator shall review, update, 

and maintain National Flood Insurance Program rate maps prepared by the Administrator, or by a community pursuant to section 

1360(a)(2) of the National Flood Insurance Act of 1968, in accordance with this section. 

(b) MAPPING.— 

(1) IN GENERAL.—In carrying out the program established 

under subsection (a), the Administrator shall— 

(A) identify, review, update, maintain, and publish National Flood Insurance Program rate maps with respect 

to— 

(i) all populated areas and areas of possible population growth located within the 100-year floodplain; 

(ii) all populated areas and areas of possible population growth located within the 500-year floodplain; 

(iii) areas of residual risk, including areas that are 

protected by levees, dams, and other flood control 

structures; 

(iv) areas that could be inundated as a result of the 

failure of a levee, dam, or other flood control structure; 

(v) areas that are protected by non-structural flood 

mitigation features; and 

(vi) the level of protection provided by flood control 

structures and by non-structural flood mitigation features; 

(B) establish or update flood-risk zone data in all such 

areas, and make estimates with respect to the rates of 

probable flood caused loss for the various flood risk zones 

for each such area; and 

(C) use, in identifying, reviewing, updating, maintaining, 

or publishing any National Flood Insurance Program rate 

map required under this section or under the National 

Flood Insurance Act of 1968 (42 U.S.C. 4011 et seq.), the 

most accurate topography and elevation data available. 

(2) MAPPING ELEMENTS.—Each map updated under this section shall— 

(A) assess the accuracy of current ground elevation data 

used for hydrologic and hydraulic modeling of flooding 

sources and mapping of the flood hazard and wherever 

necessary acquire new ground elevation data utilizing the 

most up-to-date geospatial technologies in accordance with 

guidelines and specifications of the Federal Emergency 

Management Agency; and 

(B) develop National Flood Insurance Program flood data 

on a watershed basis— 

42 

(i) to provide the most technically effective and efficient studies and hydrologic and hydraulic modeling; 

and 

(ii) to eliminate, to the maximum extent possible, 

discrepancies in base flood elevations between adjacent political subdivisions. 

(3) OTHER INCLUSIONS.—In updating maps under this section, the Administrator shall include— 

(A) any relevant information on coastal inundation 

from— 

(i) an applicable inundation map of the Corps of Engineers; and 

(ii) data of the National Oceanic and Atmospheric 

Administration relating to storm surge modeling; 

(B) any relevant information of the United States Geological Survey on stream flows, watershed characteristics, 

and topography that is useful in the identification of flood 

hazard areas, as determined by the Administrator; 

(C) any relevant information on land subsidence, coastal 

erosion areas, changing lake levels, and other flood-related 

hazards; 

(D) any relevant information or data of the National 

Oceanic and Atmospheric Administration and the United 

States Geological Survey relating to the best available 

science regarding future changes in sea levels, precipitation, and intensity of hurricanes; and 

(E) any other relevant information as may be recommended by the Technical Mapping Advisory Committee. 

(c) STANDARDS.—In updating and maintaining maps under this 

section, the Administrator shall— 

(1) establish standards to— 

(A) ensure that maps are adequate for— 

(i) flood risk determinations; and 

(ii) use by State and local governments in managing 

development to reduce the risk of flooding; and 

(B) facilitate identification and use of consistent methods 

of data collection and analysis by the Administrator, in 

conjunction with State and local governments, in developing maps for communities with similar flood risks, as determined by the Administrator; øand¿ 

(2) publish maps in a format that is— 

(A) digital geospatial data compliant; 

(B) compliant with the open publishing and data exchange standards established by the Open Geospatial Consortium; and 

(C) aligned with official data defined by the National 

Geodetic Surveyø.¿; 

(3) establish and adopt standards and requirements for development by States and communities of alternative flood insurance rate maps to be submitted to the Administrator pursuant 

to section 1360(a)(2) of the National Flood Insurance Act of 

1968, taking into consideration the recommendations of the 

Technical Mapping Advisory Council made pursuant to section 

100215(m) of this Act (42 U.S.C. 4101a(m)); and 

43 

(4) in the case of proposed alternative maps received by the 

Administrator pursuant to such section 1360(a)(2), not later 

than the expiration of the 6-month period beginning upon receipt of such proposed alternative maps— 

(A) determine whether such maps were developed in accordance with the standards and requirements adopted 

pursuant to paragraph (3) of this subsection; and 

(B) approve or disapprove such proposed maps for use 

under National Flood Insurance Program. 

(d) COMMUNICATION AND OUTREACH.— (1) IN GENERAL.—The Administrator shall— 

(A) before commencement of any mapping or map updating process, notify each community affected of the model or 

models that the Administrator plans to use in such process 

and provide an explanation of why such model or models 

are appropriate; 

(B) provide each community affected a maximum 30-day 

period beginning upon notification under subparagraph (A) 

to consult with the Administrator regarding the appropriateness, with respect to such community, of the mapping model or models to be used; provided that consultation by a community pursuant to this subparagraph shall 

not waive or otherwise affect any right of the community 

to appeal any flood hazard determinations; 

(C) upon completion of the first Independent Data Submission, transmit a copy of such Submission to the affected 

community, provide the affected community a maximum 

30-day period during which the community may provide 

data to Administrator that can be used to supplement or 

modify the existing data, and incorporate any data that is 

consistent with prevailing engineering principles; 

(D) work with States, local communities, and property 

owners to identify areas and features described in subsection (b)(1)(A)(v); 

(E) work to enhance communication and outreach to 

States, local communities, and property owners about the 

effects— 

(i) of any potential changes to National Flood Insurance Program rate maps that may result from the 

mapping program required under this section; and 

(ii) that any such changes may have on flood insurance purchase requirements; 

(F) engage with local communities to enhance communication and outreach to the residents of such communities, including tenants (with regard to contents insurance), on the matters described under subparagraph (E); 

and 

(G) not less than 30 days before issuance of any preliminary map, notify the Senators for each State affected and 

each Member of the House of Representatives for each congressional district affected by the preliminary map in writing of— 

(i) the estimated schedule for— 

(I) community meetings regarding the preliminary map; 

44 

(II) publication of notices regarding the preliminary map in local newspapers; and 

(III) the commencement of the appeals process 

regarding the map; and 

(ii) the estimated number of homes and businesses 

that will be affected by changes contained in the preliminary map, including how many structures will be 

that were not previously located in an area having 

special flood hazards will be located within such an 

area under the preliminary map; and 

(H) upon the issuance of any proposed map and any notice of an opportunity to make an appeal relating to the 

proposed map, notify the Senators for each State affected 

each Member of the House of Representatives for each congressional district affected by the proposed map of any action taken by the Administrator with respect to the proposed map or an appeal relating to the proposed map. 

(2) REQUIRED ACTIVITIES.—The communication and outreach 

activities required under paragraph (1) shall include— 

(A) notifying property owners when their properties become included in, or when they are excluded from, an area 

covered by the mandatory flood insurance purchase requirement under section 102 of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a); 

(B) educating property owners regarding the flood risk 

and reduction of this risk in their community, including 

the continued flood risks to areas that are no longer subject to the flood insurance mandatory purchase requirement; 

(C) educating property owners regarding the benefits 

and costs of maintaining or acquiring flood insurance, including, where applicable, lower-cost preferred risk policies 

under the National Flood Insurance Act of 1968 (42 U.S.C. 

4011 et seq.) for such properties and the contents of such 

properties; 

(D) educating property owners about flood map revisions 

and the process available to such owners to appeal proposed changes in flood elevations through their community, including by notifying local radio and television stations; and 

(E) encouraging property owners to maintain or acquire 

flood insurance coverage. 

(e) COMMUNITY REMAPPING REQUEST.—Upon the adoption by the 

Administrator of any recommendation by the Technical Mapping 

Advisory Council for reviewing, updating, or maintaining National 

Flood Insurance Program rate maps in accordance with this section, a community that believes that its flood insurance rates in effect prior to adoption would be affected by the adoption of such recommendation may submit a request for an update of its rate maps, 

which may be considered at the Administrator’s sole discretion. The 

Administrator shall establish a protocol for the evaluation of such 

community map update requests. 

45 

(f) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to 

be appropriated to the Administrator to carry out this section 

$400,000,000 for each of fiscal years 2013 through 2017. 

* * * * * * * 

(46) 

MINORITY VIEWS 

H.R. 2246 would repeal the federal requirement to purchase flood 

insurance for commercial properties and multifamily properties 

with commercial financing. The Federal Disaster Protection Act requires properties located in a special flood hazard area with a federally-backed mortgage to be covered with flood insurance. Under 

the law, commercial properties must obtain a maximum of 

$500,000 of coverage per structure. H.R. 2246 creates a wholesale 

exemption from this requirement for all commercial properties regardless of size, sophistication, or loan amount. 

Some stakeholders have argued that the mandatory purchase requirement is superfluous and cumbersome for large and sophisticated commercial entities who need coverage well above the current 

maximum coverage of $500,000 available from the National Flood 

Insurance Program (NFIP). These entities often purchase flood insurance in the private market because the NFIP does not provide 

enough coverage for their needs. But due to perceived ambiguity as 

to whether that private policy counts as compliance with the mandatory purchase requirement, some entities resort to buying a firstdollar NFIP policy in addition to an excess private policy rather 

than simply purchasing one private policy to cover all of their 

needs. Some stakeholders have also expressed concern with the 

mandatory purchase requirement as it relates to the purchase of 

blanket insurance policies. The NFIP currently does not provide 

blanket policies, and instead requires separate policies for each individual structure. This can be administratively inefficient and 

cumbersome for commercial entities with multiple structures. 

H.R. 2246 presents an overly broad solution for issues that are 

specific to large commercial entities, and a number of groups have 

expressed their opposition to this wholesale exemption. The Independent Community Bankers, for example, oppose this provision 

because it would harm community banks and small businesses because it increases the likelihood that the collateral they are securing would be unprotected and likely suffer a loss in the event of 

a flood. The flood insurance take-up rate for properties outside of 

this mandatory purchase requirement is extremely low, meaning 

that most people who aren’t required to buy flood insurance do not 

purchase it. That is why a coalition of stakeholders representing 

the commercial and multifamily real estate industry have expressed concerns about affordability challenges for low- and midvalue properties that will likely opt to forgo flood insurance if given 

the choice. This creates a ripple effect in the case of a flood where 

the road to recovery is longer and more difficult for businesses in 

flood zones. 

H.R. 2246 also requires the Federal Emergency Management 

Agency (FEMA) to annually cede a portion of its risk to the private 

reinsurance or capital markets, which could lead unnecessarily to 

47 

1See https://www.fema.gov/nfip-reinsurance-program. 

higher costs on the NFIP and subsequently higher premiums on 

policyholders. The Biggert-Waters Act of 2012, clarified that FEMA 

has the authority to purchase reinsurance from the private reinsurance and capital markets and in the past two years, FEMA has exercised this authority as appropriate. In January of this year, 

FEMA agreed to a transfer of $1.042 billion of the NFIP’s financial 

risk to 25 reinsurers through January 1, 2018. The reinsurance 

contract, which cost FEMA $150 million in premium, requires the 

reinsurers to cover 26 percent of losses in a single flooding event 

between $4 billion and $8 billion. According to FEMA, there is a 

17.2 percent chance of triggering this clause in 2017. Further, 

FEMA intends to use its current authority to make future reinsurance purchases.1

Notwithstanding FEMA’s actions and multi-year plan to further 

engage the reinsurance markets, H.R. 2246 would place cumbersome requirements on FEMA with regard to how much risk it 

must cede to the private sector. Specifically, the bill would require 

FEMA to make this determination in accordance with a probable 

maximum’ loss (PML) target, which departs from traditional PML 

metrics would hamstring FEMA’s ability to negotiate the best deal 

possible for the National Flood Insurance Program and policyholders and appears to be confusing at best and unworkable at 

worst. 

Lastly, H.R. 2246 would set up a process to supplant FEMA’s 

Flood Insurance Rate Maps (FIRMs) with private or community 

flood maps. The bill would require the Technical Mapping Advisory 

Council (TMAC) to develop a set of standards, guidelines, and procedures that communities would use to develop alternative flood 

maps. It is unclear how this would improve on current law as 

FEMA already conducts extensive communication and outreach efforts with the community during the mapping process, including 

various minimum waiting periods, and consideration of any additional data that the community provides to improve the map. Moreover, today FIRMs cannot go into effect until a community adopts 

the map. H.R. 2246 would flip this process on its head, by requiring 

FEMA make the final certification. While this new process may advantage wealthier communities with the means to take on thiscomplicated and technical process, the bill does not provide any 

finding or technical assistance for lower-income communities that 

lack the resources to do so. 

For these reasons, we oppose H.R. 2246. 

MAXINE WATERS. KEITH ELLISON. MICHAEL E. CAPUANO. STEPHEN F. LYNCH. CAROLYN B. MALONEY. JOYCE BEATTY. DANIEL KILDEE. GWEN MOORE. CHARLIE CRIST. 

BRAD SHERMAN. 

NYDIA M. VELA ́ QUEZ. 

48 

AL GREEN. GREGORY W. MEEKS. VICENTE GONZALEZ. 

Æ