```

[House Report 109-410]
[From the U.S. Government Publishing Office]

109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     109-410

======================================================================

 
          FLOOD INSURANCE REFORM AND MODERNIZATION ACT OF 2006

                                _______
                                

 April 6, 2006.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 4973]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 4973) to restore the financial solvency of the 
national flood insurance program, and for other purposes, 
having considered the same, report favorably thereon without 
amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     5
Committee Consideration..........................................     5
Committee Votes..................................................     5
Committee Oversight Findings.....................................     6
Performance Goals and Objectives.................................     7
New Budget Authority, Entitlement Authority, and Tax Expenditures     7
Committee Cost Estimate..........................................     7
Congressional Budget Office Estimate.............................     7
Federal Mandates Statement.......................................    12
Advisory Committee Statement.....................................    12
Constitutional Authority Statement...............................    12
Applicability to Legislative Branch..............................    12
Section-by-Section Analysis of the Legislation...................    12
Changes in Existing Law Made by the Bill, as Reported............    16
Additional Views.................................................    25

                          Purpose and Summary

    The purpose of H.R. 4973 is to restore the financial 
solvency of the National Flood Insurance Program and to 
increase the accountability of the Federal Emergency Management 
Agency with respect to its administration of the program.
    The Flood Insurance Reform and Modernization Act of 2006 
(``FIRM'') increases the borrowing authority for the National 
Flood Insurance Program to $25 billion to help cover its 
contractual obligations to flood insurance policyholders, 
directs the Federal Emergency Management Agency to institute 
reforms in the program, increases the penalties for failure to 
enforce mandatory flood policy purchase requirements, and 
requires a study on: 1) pre-FIRM properties (those built before 
1974) that currently receive subsidized flood insurance rates; 
2) mandatory purchase requirement for the natural 100-year 
floodplain; and 3) mandatory purchase requirement for non-
federally related loans and the Constitutionality of such 
requirement. This Act also includes numerous key reforms, 
including a phase-in of actuarial rates for vacation homes, 
second homes, and nonresidential properties.

                  Background and Need for Legislation

    The National Flood Insurance Program (NFIP) was created as 
part of the National Flood Insurance Act of 1968 to enable the 
Federal government to help cover the cost of flood damages. 
Prior to that time, insurance companies generally did not offer 
coverage for flood disasters because of the high risks 
involved. The legislation as amended in 1973 and 1994 
authorizes the Federal Insurance Administration (FIA) and 
Mitigation Directorate to administer the NFIP as part of the 
Federal Emergency Management Agency (FEMA). Although FEMA has 
now been absorbed into the Department of Homeland Security, the 
NFIP continues to operate as it had before restructuring.
    Since 1986, the NFIP has been financially self-supporting 
for the average historical loss year. Consistent with statute, 
the NFIP borrowed from the U.S. Treasury during those years in 
which the nation experienced unusually high flood losses. These 
loans were repaid to the Treasury, with interest, from 
policyholder premiums and related fees.
    National Flood Insurance Program claims liabilities arising 
from Hurricanes Katrina and Rita are estimated at between $23 
and $25 billion, far surpassing the total claims paid in the 
entire history of the NFIP. On September 20, 2005, the 
President signed into law the National Flood Insurance Enhanced 
Borrowing Authority Act of 2005 (P.L. 109-65), which authorized 
the NFIP temporarily to borrow up to $3.5 billion from the U.S. 
Treasury to pay claims. H.R. 4133, signed into law by the 
President on November 21, 2005, as P.L. 109-106, further 
increased FEMA's borrowing authority to $18.5 billion. A third 
borrowing authority increase (S. 2275) was signed into law on 
March 23, 2006 (P.L. 109-208) and increased FEMA's borrowing 
authority to $20.775 billion.
    Despite the three borrowing authority increases, the NFIP 
will not have enough funds to pay all outstanding claims 
without another increase. FEMA estimates that they will deplete 
these funds no later than August, 2006. In the absence of 
additional borrowing authority, FEMA would eventually advise 
those insurance companies participating in the NFIP ``Write-
Your-Own'' program (companies that sell flood policies on 
FEMA's behalf) that due to the absence of borrowing authority, 
the companies should stop processing claims. Given FEMA's legal 
obligation to pay the estimated 225,000 Katrina and Rita-
relatedclaims, homeowners who are not paid could initiate legal 
action against the U.S. Government. The increased borrowing authority 
(to $25 billion) in H.R. 4973 would ensure that all claims would be 
paid.
    The dramatic impact of the 2005 hurricanes on the NFIP has 
highlighted the need for reforms to the program. Some much-
needed reforms, passed by Congress as part of the Bunning-
Bereuter-Blumenauer Flood Insurance Reform Act of 2004, have 
yet to be implemented almost two years after that legislation 
was signed into law. Among the 2004 reforms are provisions to 
address costly repetitive flood-loss properties. A pilot 
program to allow communities to receive funding for flood 
mitigation activities was not funded for the first two years 
for which it was authorized and is set to expire in 2009. H.R. 
4973 would extend the program into 2011 in order to reflect the 
original intent of the Flood Insurance Reform Act of 2004.
    H.R. 4973 further directs FEMA to continue to work with the 
insurance industry, state insurance regulators, and other 
interested parties to implement the minimum training and 
education standards for all insurance agents who sell flood 
insurance policies that FEMA established under the notice 
published September 1, 2005 (70 Fed. Reg. 52117) pursuant to 
section 207 of the Bunning-Bereuter-Blumenauer Flood Insurance 
Reform Act of 2004 (42 U.S.C. 4011 note). FEMA is also directed 
to finalize and confirm the establishment of an appeals process 
through which holders of a flood insurance policy could appeal 
decisions with respect to claims and proof of loss and to 
submit a report to Congress on the status of the implementation 
of all the 2004 reforms. Though the Committee recognizes that 
the hurricanes of 2005 and the series of catastrophic events in 
Florida in 2004 have occupied FEMA's resources, these reforms 
must be implemented.
    Using the 2004 reforms as a foundation, H.R. 4973 requires 
FEMA to take steps that will make the NFIP more actuarially 
sound. Under the current program guidelines, structures built 
before 1974 or before the issuance of an area Flood Insurance 
Rate Map (maps that designate the 100-year floodplain) are 
known as ``pre-FIRM'' properties and are paying subsidized 
flood insurance rates. While some have called for actuarial 
rates on all pre-FIRM properties, the increased premiums would 
be a burden to some homeowners. H.R. 4973 therefore calls for 
the phased-in elimination subsidies only for pre-FIRM 
nonresidential properties, vacation homes, and second homes. 
This will ease the transition to higher prices, while still 
providing millions of dollars of much-needed additional funding 
for the NFIP. During Committee consideration of H.R. 4973, an 
amendment was offered that called for elimination of all 
subsidies on pre-FIRM properties at the time these properties 
are sold. The Committee intends to further review the potential 
impacts of this proposed reform, which was not incorporated 
into the final Committee-approved bill.
    Other provisions of this legislation that will help make 
the NFIP more actuarially sound include an increase in fines 
for federally-regulated lending institutions that do not 
enforce mandatory purchase requirements from $350 to $2,000; an 
increase in the cap that any one lending institution can be 
fined in a given year from $100,000 to $1,000,000; 
authorization for FEMA to increase flood insurance premiums up 
to 15 percent annually on all properties; requirement of notice 
in RESPA good faith estimates that homeowners who are not 
legally obligated to purchase flood insurance under the 
mandatory purchase requirement can purchase an NFIP policy and 
escrow flood insurance payments; and a requirement that the 
Comptroller General study the possible extension of mandatory 
flood insurance purchase requirement to properties secured by 
non-federally related loans.
    H.R. 4973 includes a number of much-needed reforms that 
will modernize the program and at the same time increase the 
amount of premiums generated. Coverage limits for NFIP flood 
insurance policies have remained static since 1994, without 
adjustment for inflation, and despite the fact that housing 
prices have multiplied in many areas. This legislation takes a 
reasonable approach by simply adjusting the current coverage 
limits to account for inflation. Coverage limits for 
residential properties will be increased from $250,000 to 
$335,000 and limits for residential contents coverage will be 
raised from $100,000 to $135,000. Coverage limits for 
nonresidential properties will be increased from $500,000 to 
$670,000.
    While structural damage is the most obvious by-product of 
flooding, other harms occur that can be just as devastating. 
One of the greatest expenses to FEMA following the 2005 
hurricanes was for hotel rooms for displaced homeowners. H.R. 
4973 would provide for $1,000 of living expenses for 
policyholders after a flood. Finished basements are not 
currently covered by a standard flood insurance policy. This 
legislation allows the NFIP to offer additional coverage to 
protect such basements at actuarial prices. Businesses also 
face other costs as a result of flooding that are not currently 
able to be covered by the NFIP; for example, a business that is 
flooded and cannot operate must still pay an assortment of 
expenses, including leases and payroll. This Act would allow 
commercial policyholders to purchase business interruption 
coverage at actuarial prices. Finally, replacement cost of 
contents coverage is made available as an option--again, at 
actuarial prices.
    Because flood insurance policy requirements and rates are 
dependent on flood maps, these maps must be modernized to 
preserve the integrity of the program. Flood elevation maps 
must also be current so that homeowners in areas affected by 
events such as Hurricane Katrina can rebuild to proper levels 
after flooding. H.R. 4973 directs FEMA to certify the 
modernization of all flood maps and to map the 500-year 
floodplain, which will help homeowners across the country 
better understand their flood risks. For purposes of map 
modernization, $300 million is authorized for each of fiscal 
years 2007 through 2012. The bill also directs FEMA to maintain 
an inventory of all levees located in the U.S. and calls for a 
study on extending the mandatory purchase requirement to those 
structures protected by levees in the 100-year floodplain. As 
noted during markup of H.R. 4973, the Committee understands the 
importance of reviewing the status and condition of the 
nation's levees and will work to ensure that the NFIP 
incorporates updated information about the condition of these 
levees when establishing flood insurance premium rates. This 
legislation also requires FEMA to keep Congress informed about 
the progress of its mapping program by submitting annual 
reports and authorizes FEMA to hire additional staff to carry 
out this and other provisions of the bill.
    Finally, in order for the NFIP to maintain adequate levels 
of solvency and operate efficiently, H.R. 4973 requires FEMA to 
submit a report to Congress on the financial status of the NFIP 
twice a year. Reforming the NFIP will be an ongoing process, 
and Congress needs up-to-date information in order to make 
informed policy decisions.

                                Hearings

    No hearings were held on this legislation.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
March 15, 2006, to consider a Committee Print entitled ``Flood 
InsuranceReform and Modernization Act of 2006''. The Committee 
Print, as amended, was introduced as H.R. 4973, and the Committee 
ordered H.R. 4973 reported to the House by voice vote on March 16, 
2006.

                            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. A 
motion by Mr. Oxley to report the bill to the House with a 
favorable recommendation was agreed to by a voice vote.
    The following amendment to the Committee Print was decided 
by a record vote. The names of Members voting for and against 
follow:
          An amendment offered by Mr. Hensarling, No. 6, 
        providing for immediate termination of subsidized 
        rates, was NOT AGREED TO by a record vote of 10 yeas 
        and 45 nays (Record vote no. FC-14).

                                              RECORD VOTE NO. FC-14
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........  Mr. Frank (MA)...  ........        X   .........
Mr. Leach......................  ........        X   .........  Mr. Kanjorski....  ........        X   .........
Mr. Baker......................  ........  ........  .........  Ms. Waters.......  ........        X   .........
Ms. Pryce (OH).................  ........        X   .........  Mr. Sanders......  ........        X   .........
Mr. Bachus.....................        X   ........  .........  Mrs. Maloney.....  ........        X   .........
Mr. Castle.....................  ........        X   .........  Mr. Gutierrez....  ........        X   .........
Mr. Royce......................        X   ........  .........  Ms. Velazquez....  ........  ........  .........
Mr. Lucas......................  ........        X   .........  Mr. Watt.........  ........  ........  .........
Mr. Ney........................  ........        X   .........  Mr. Ackerman.....  ........  ........  .........
Mrs. Kelly.....................  ........        X   .........  Ms. Hooley.......  ........        X   .........
Mr. Paul.......................  ........  ........  .........  Ms. Carson.......  ........        X   .........
Mr. Gillmor....................  ........  ........  .........  Mr. Sherman......  ........        X   .........
Mr. Ryun (KS)..................  ........        X   .........  Mr. Meeks (NY)...  ........        X   .........
Mr. LaTourette.................  ........        X   .........  Ms. Lee..........  ........        X   .........
Mr. Manzullo...................  ........        X   .........  Mr. Moore (KS)...  ........        X   .........
Mr. Jones (NC).................  ........        X   .........  Mr. Capuano......  ........        X   .........
Mrs. Biggert...................  ........        X   .........  Mr. Ford.........  ........  ........  .........
Mr. Shays......................  ........        X   .........  Mr. Hinojosa.....  ........  ........  .........
Mr. Fossella...................  ........        X   .........  Mr. Crowley......  ........        X   .........
Mr. Gary G. Miller (CA)........  ........        X   .........  Mr. Clay.........  ........        X   .........
Mr. Tiberi.....................  ........        X   .........  Mr. Israel.......  ........  ........  .........
Mr. Kennedy (MN)...............  ........  ........  .........  Mrs. McCarthy....  ........        X   .........
Mr. Feeney.....................        X   ........  .........  Mr. Baca.........  ........  ........  .........
Mr. Hensarling.................        X   ........  .........  Mr. Matheson.....  ........        X   .........
Mr. Garrett (NJ)...............        X   ........  .........  Mr. Lynch........  ........  ........  .........
Ms. Brown-Waite (FL)...........  ........        X   .........  Mr. Miller (NC)..  ........        X   .........
Mr. Barrett (SC)...............        X   ........  .........  Mr. Scott (GA)...  ........        X   .........
Ms. Harris.....................  ........        X   .........  Mr. Davis (AL)...  ........        X   .........
Mr. Renzi......................  ........        X   .........  Mr. Al Green (TX)  ........        X   .........
Mr. Gerlach....................  ........        X   .........  Mr. Cleaver......  ........  ........  .........
Mr. Pearce.....................        X   ........  .........  Ms. Bean.........  ........        X   .........
Mr. Neugebauer.................  ........  ........  .........  Ms. Wasserman      ........        X   .........
                                                                 Schultz.
Mr. Price (GA).................        X   ........  .........  Ms. Moore (WI)...  ........  ........  .........
Mr. Fitzpatrick (PA)...........  ........        X   .........
Mr. Davis (KY).................  ........        X   .........
Mr. McHenry....................        X   ........  .........
Mr. Campbell)..................        X   ........  .........
----------------------------------------------------------------------------------------------------------------
Mr. Sanders is an independent, but caucuses with the Democratic Caucus.

    The Committee considered the following other amendments:
          An amendment offered by Ms. Wasserman Schultz, No. 1, 
        requiring FEMA participation in state disaster claims 
        mediation programs, was AGREED TO by a voice vote.
          An amendment offered by Mr. Frank, No. 2, dealing 
        with post-disaster flood elevation determinations, was 
        AGREED TO by a voice vote.
          An amendment offered by Mr. Price (on behalf of Mr. 
        Hensarling), No. 3, striking the increase in coverage 
        limits, was NOT AGREED TO by a voice vote.
          An amendment offered by Mr. Watt, No. 4, providing 
        emergency authorization for CDBG for areas impacted by 
        Hurricane Katrina, was WITHDRAWN.
          An amendment offered by Mr. Miller of California, No. 
        5, establishing penalties against regulated lending 
        institution or enterprise, was AGREED TO by a voice 
        vote.
          An amendment offered by Mr. Hensarling, No. 7, 
        striking section 8 (coverage for additional living 
        expenses), was NOT AGREED TO by a voice vote.
          An amendment offered by Mr. Hensarling, No. 8, 
        decreasing borrowing authority, was NOT AGREED TO by a 
        voice vote.
          An amendment offered by Mr. Garrett, No. 9, changing 
        ``properties'' to ``certain pre-firm properties'', was 
        WITHDRAWN.
          An amendment offered by Mr. Garrett, No. 10, to 
        identify conditions of levees, was WITHDRAWN.
          An amendment offered by Mr. Garrett, No. 11, insert 
        after ``feasibility of'', ``, and basis under the 
        Constitution of the United States for,'' was AGREED TO 
        by a voice vote.

                      Committee Oversight Findings

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

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    The goal of H.R. 4973 is to restore the financial solvency 
of the National Flood Insurance Program and to increase the 
accountability of the Federal Emergency Management Agency with 
respect to its administration of the program.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

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

                        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. The 
Congressional Budget Office estimates that reforms to the 
National Flood Insurance Program that would be initiated by 
H.R. 4973 would result in savings of $400 million over the 
2007-2011 period and by about $1.5 billion over the 2007-2016 
period. Changes in direct spending associated with this 
legislation are directly related to the fact that this bill 
addresses the need for an increase in the Program's borrowing 
authority necessary to fulfill the Program's legal obligation 
to pay claims arising from last year's hurricanes. This 
existing obligation must be considered under current law and 
budgetary scorekeeping rules.

                  Congressional Budget Office Estimate

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

                                                     April 4, 2006.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4973, the Flood 
Insurance Reform and Modernization Act of 2006.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Julie 
Middleton.
            Sincerely,
                                          Donald B. Marron,
                                                   Acting Director.
    Enclosure.

H.R. 4973--Flood Insurance Reform and Modernization Act of 2006

    Summary: H.R. 4973 would increase the amount that the 
Federal Emergency Management Agency (FEMA) can borrow from the 
U.S. Treasury to cover expenses of the National Flood Insurance 
Program (NFIP). Under the legislation, FEMA's borrowing 
authority would increase from $20.8 billion to $25.0 billion. 
As a result, CBO estimates that enacting H.R. 4973 would 
increase direct spending by $1.4 billion in 2006 and $2.8 
billion in 2007. By raising certain civil penalties, the bill 
would also increase governmental receipts (revenues) by an 
estimated $1 million per year.
    In addition, the bill would reform the NFIP by requiring 
FEMA to phase in actuarially sound premium rates for flood 
insurance on commercial and nonprimary residences (i.e., second 
and vacation homes). H.R. 4973 also would authorize FEMA to 
expand the flood insurance program to include new types of 
insurance and higher dollar limits on the amount of coverage 
available. The bill would raise the cap on the average annual 
premium increase allowed for each risk category from 10 percent 
to 15 percent.
    H.R. 4973 would increase the authorization of 
appropriations for FEMA's flood mitigation and flood mapping 
programs. Assuming appropriation of the authorized amounts, CBO 
estimates that resulting outlays would total about $1.1 billion 
over the 2007-2011 period and an additional $735 million after 
that period.
    H.R. 4973 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments. H.R. 4973 
would impose a private-sector mandate on certain mortgage 
lenders. Based on information from industry and government 
sources, CBO expects the direct costs to comply with the 
mandate would fall below the annual threshold for private-
sector mandates established in UMRA ($128 million in 2006, 
adjusted annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 4973 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--
                                               -----------------------------------------------------------------
                                                   2006       2007       2008       2009       2010       2011
----------------------------------------------------------------------------------------------------------------
                                         CHANGES IN DIRECT SPENDING \1\

Net Spending Under Current Law for Flood
 Insurance:
    Estimated Budget Authority................     20,775          0          0          0          0          0
    Estimated Outlays.........................     20,775          0          0          0          0          0
Proposed Changes:
    Estimated Budget Authority................      1,425      2,800          0          0          0          0
    Estimated Outlays.........................      1,425      2,800          0          0          0          0
Net Spending Under H.R. 4973 for Flood
 Insurance:
    Estimated Budget Authority................     22,200      2,800          0          0          0          0
    Estimated Outlays.........................     22,200      2,800          0          0          0          0

                                        SPENDING SUBJECT TO APPROPRIATION

Spending Under Current Law for Flood
 Mitigation and Mapping:
    Budget Authority..........................        226          0          0          0          0          0
    Estimated Outlays.........................        223        211         73         30          0          0
Proposed Changes:
    Authorization Level.......................          0        300        300        300        340        340
    Estimated Outlays.........................          0         70        195        255        300        325
Spending Under H.R. 4973 for Flood Mitigation
 and Mapping:
    Authorization Level.......................        226        300        300        300        340        340
    Estimated Outlays.........................        223        281        268        285        300        325
----------------------------------------------------------------------------------------------------------------
\1\ In addition, CBO estimates that revenues would increase by about $1 million a year over the 2007-2016
  period.

    Basis of estimate: CBO estimates that enacting H.R. 4973 
would increase direct spending by $1.4 billion in 2006 and $2.8 
billion in 2007. In addition, assuming appropriation of the 
authorized amounts, CBO estimates that implementing the bill 
would add $1.1 billion to discretionary outlays over the 2007-
2011 period and an additional $735 million after that period.

Direct spending

    Increase in Borrowing Authority. Through the NFIP, FEMA 
offers flood insurance in communities that conform to the 
program's standards for flood plain management. Under current 
law, if premiums from policy sales and interest income are 
insufficient to cover the program's costs, FEMA can borrow up 
to $20.8 billion from the U.S. Treasury. H.R. 4973 would 
increase the limit on FEMA's borrowing authority to $25.0 
billion. Based on information from FEMA about the likely need 
to pay claims in response to recent hurricanes and the 
historical rate of claims processing for major floods, CBO 
expects that the agency would exercise some of that authority 
in 2006 and the rest in 2007, resulting in additional outlays 
of $1.4 billion in 2006 and $2.8 billion in 2007.
    Current law requires FEMA to repay any borrowed funds (with 
interest) as it collects premiums, provided that the program's 
other costs are fully covered. However, CBO expects that the 
agency would be unlikely to repay funds borrowed under H.R. 
4973 within the next 10 years because premium collections over 
that period will probably be used to pay interest on FEMA's 
debt and future flood insurance claims and expenses. The agency 
is likely to face additional claims of $800 million to $1 
billion per year for flooding events around the country that 
typically occur each year. FEMA also will face debt-service 
costs of about $600 million in 2006 and over $1 billion in 2007 
and subsequent years. CBO expects the program will have 
insufficient funds to pay all of those costs over the next 10 
years.
    Pre-FIRM Rate Increase. H.R. 4973 would authorize the NFIP 
to gradually increase rates on properties that are either 
nonresidential structures or not primary residences (such as 
vacation homes) that were built before the community's flood 
insurance rate map (FIRM) was completed (or before 1975, 
whichever is later). Such properties are known as pre-FIRM 
structures. Under current law and policies, most pre-FIRM 
structures are charged a flood insurance premium that is less 
than the full actuarial cost of the insurance. Thus, such 
policies are considered to be subsidized by the program. The 
bill would authorize FEMA to increase rates on those specified 
types of properties by 15 percent a year until the actuarial 
rate is achieved.
    According to FEMA, approximately 450,000 properties meet 
those criteria, and the average premium for those properties is 
about $800 a year. CBO expects that owners of some of those 
properties would either drop flood insurance coverage or reduce 
their level of coverage in response to an increase in premium 
charges. In addition, CBO anticipates that the premiums on 
about 10 percent of the targeted properties would actually 
decrease as a result of this bill. CBO estimates that reducing 
the subsidy on these properties would increase receipts from 
flood insurance premiums by $400 million over the 2007-2011 
period and by about $1.5 billion over the 2007-2016 period.
    CBO anticipates that any additional receipts generated by 
increasing insurance premiums on those properties would be 
spent on paying future flood insurance claims that it would 
otherwise not have the resources to pay under current law--
resulting in no net budgetary impact.
    Increased Coverage Limits and New Lines of Coverage. H.R. 
4973 would increase the total amount of flood insurance that 
residential customers can buy from $350,000 to $470,000. The 
bill also would increase the total amount of flood insurance 
that commercial businesses can buy from $1 million to $1.3 
million. In addition, the bill would authorize FEMA to offer 
four new lines of optional insurance coverage--for living 
expenses and basement repairs for residential properties, 
business interruption for commercial properties, and additional 
contents coverage for residential and commercial property.
    The NFIP currently has approximately 4.7 million policies 
in force, with a total exposure of nearly $800 billion. Those 
policyholders pay over $2 billion in premiums to the federal 
government annually. CBO assumes that the increased coverage 
limits and new lines of coverage would be offered to 
policyholders when they initiate or renew their coverage. The 
new coverage would be offered at actuarial rates. These new 
lines of coverage would increase premium receipts to the 
federal government, which would be roughly offset by additional 
claims payments.
    Increase in Annual Limitation on Rate Increases. H.R. 4973 
would authorize the NFIP to increase rates on policies within a 
specified risk category by an average of 15 percent per year. 
Under current law, the limit on rate increases is 10 percent. 
CBO estimates that raising this limit would have no significant 
impact on the federal budget because FEMA has not increased 
rates by as much as 10 percent in the past and does not appear 
to be constrained in its rate-setting process by the current 
cap on premiums. If additional receipts were generated as a 
result of this provision, CBO expects that such funds would be 
spent to pay future flood insurance claims that it would 
otherwise not have the resources to pay under current law--
resulting in no net budgetary impact.
    Civil Penalties. Section 6 of H.R. 4973 would increase the 
civil penalty from $350 to $2,000 for lenders that do not 
enforce the mandatory purchase requirement. CBO estimates that 
the increased revenue from the civil penalties established 
under this bill would amount to about $1 million a year.

Spending subject to appropriation

    Mitigation of Severe-Repetitive-Loss Properties. Section 13 
would extend for two years the authorization of appropriations 
for the mitigation pilot program that funds preventive measures 
for properties that have sustained four or more losses totaling 
more than $20,000, or two or more losses that cumulatively 
exceed the value of the property. Under current law, up to $40 
million a year from the National Flood Insurance Fund can be 
used for this program through 2009. Based on historical outlay 
rates for mitigation projects, CBO estimates that implementing 
this section would cost about $45 million over the 2007-2011 
period and an additional $35 million after that period.
    Flood Mapping Program. Section 16 would authorize the 
appropriation of $300 million a year over the 2007-2012 period 
for updating flood maps to include the 500-year flood plain and 
areas that would be flooded if a dam or levee failed. In 
addition, the bill would reestablish the Technical Mapping 
Advisory Council to assist with managing flood mapping 
activities. Based on historical outlay rates for this program, 
CBO estimates that implementing this section would cost $1.1 
billion over the 2007-2011 period and an additional $700 
million in subsequent years.
    GAO Study. Section 3 would authorize the Government 
Accountability Office (GAO) to conduct a study to assess the 
status of pre-FIRM properties and the feasibility of extending 
the mandatory purchase requirement to nonfederally insured 
mortgages and those properties in the ``natural'' 100-year 
flood plain (i.e., those properties behind levees and dams). 
CBO estimates that this provision would cost less than $500,000 
in fiscal year 2007.
    Staff Increases. Section 19 of the bill would authorize 
FEMA to hire additional staff to implement the provisions of 
this bill. Under current law, the NFIP collects about $125 
million a year from administrative fees that are collected in 
conjunction with annual insurance premiums. Subject to 
appropriation, those fees can be spent on salaries and expenses 
related to flood insurance operations and flood mitigation. The 
amount of increased administrative costs that would result from 
the bill is uncertain because FEMA does not yet know how it 
would implement various provisions. If staffing increases were 
significant, however, it is likely that the NFIP would raise 
the administrative fees assessed on policyholders, and that 
added income from those fees would offset the increased 
spending on salaries and expenses.
    Estimated Impact on State, local, and tribal governments: 
H.R. 4973 contains no intergovernmental mandates as defined in 
UMRA and would not affect the budgets of state, local, or 
tribal governments.
    Estimated impact on the private sector: H.R. 4973 would 
impose a private-sector mandate, as defined in UMRA, on certain 
mortgage lenders. Based on information from industry and 
government sources, CBO expects the direct costs to comply with 
the mandate would be small--less than the annual threshold for 
private-sector mandates established in UMRA ($128 million in 
2006, adjusted annually for inflation).
    Under current law, mortgage lenders that make federally-
related mortgages are required to provide a good faith estimate 
of the amount or range of charges the borrower is likely to 
incur for specific settlement services. The bill would require 
such mortgage lenders to include in each estimate a conspicuous 
statement that flood insurance coverage for residential real 
estate is generally available under the National Flood 
Insurance Program, whether or not the real estate is located in 
an area subject to special flood hazards, and that, to obtain 
such coverage, a homeowner or purchaser should contact a 
property insurance agent, broker, or company. The good faith 
estimate would also be required to contain the statement that 
the escrowing of flood insurance payments is required for many 
loans under section 102(d) of the Flood Disaster Protection Act 
of 1973, and may be a convenient and available option with 
respect to other loans. According to industry representatives, 
the cost for mortgage lenders to include additional statements 
in such an estimate would be minimal.
    Estimated prepared by: Federal Costs: Julie Middleton and 
Perry Beider. Impact on State, Local, and Tribal Governments: 
Melissa Merrell. Impact on the Private Sector: Paige Paper/
Bach.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

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

                      Advisory Committee Statement

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

                   Constitutional Authority Statement

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

                  Applicability to Legislative Branch

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

             Section-by-Section Analysis of the Legislation

Section 1. Short title and table of contents

    This section establishes the short title of the bill, the 
``Flood Insurance Reform and Modernization Act of 2006.'' This 
section also contains a table of contents, setting out the 
title of each subsequent section.

Section 2. Findings and purposes

    This section sets forth certain findings regarding the need 
for reform of and increased borrowing authority for the 
national flood insurance program. This section also establishes 
the purposes of the Act.

Section 3. Study regarding status of pre-FIRM properties and mandatory 
        purchase requirement for natural 100-year floodplain and non-
        federally related loans

    This section requires the Comptroller General of the United 
States to conduct a study on the effects of extending the 
mandatory flood insurance purchase requirement to all 
properties located in a flood hazard area, whether or not the 
mortgage on the property is federally-backed. This section also 
requires the Comptroller General to study coverage for pre-FIRM 
properties (properties built before 1974 that receive 
subsidized insurance rates), as well as the effects of 
extending the mandatory purchase requirement to properties 
protected by dams and levees. This report is to be submitted to 
the Congress no later than 6 months from the enactment of this 
Act.

Section 4. Phase-in of actuarial rates for nonresidential properties 
        and non-primary residences

    This section amends section 1308(c) of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4015(c)) by establishing that 
nonresidential properties and non-primary residences will be 
charged actuarial, instead of subsidized, rates. This change to 
actuarial pricing for these properties will be implemented over 
time.

Section 5. Reduction of waiting period for effective date of policies

    This section amends subsection (c)(1) of section 1306 of 
the National Flood Insurance Act of 1968 (42 U.S.C. 4013(c)(1)) 
by reducing the number of days a newly-purchased or modified 
flood insurance policy will become effective from 30 days to 15 
days.

Section 6. Enforcement

    This section amends paragraph (5) of section 102(f) of the 
Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a) by 
increasing to $2,000 the fine levied against federally-
regulated lending institutions for each failure to enforce 
mandatory flood insurance purchase requirements and increasing 
the year cap on fines for institutions to $1,000,000.

Section 7. Maximum coverage limits

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

Section 8. Coverage for additional living expenses, basement 
        improvements, business interruption, and replacement cost of 
        contents

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

Section 9. Increase in annual limitation on premium increases

    This section amends section 1308(e) of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4015(e)) by increasing the 
annual limitation on premium increases from 10 percent to 15 
percent.

Section 10. Increase in borrowing authority

    This section amends subsection (a) of section 1309 of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4016(a)), as 
amended by the National Flood Insurance Program Enhanced 
Borrowing Authority Act of 2005 (P.L. 109-65; 119 Stat. 1998), 
by increasing the national flood insurance program's borrowing 
authority to $25 billion. This section also requires that FEMA 
submit a report to Congress, not later than 6 months after 
enactment of this legislation, on how it intends to repay funds 
borrowed under this increased authority.

Section 11. FEMA participation in state disaster claims mediation 
        programs

    This section requires FEMA, upon request of a state 
insurance commissioner, to participate in a state disaster 
claims mediation program for the non-binding mediation of flood 
insurance claims.

Section 12. FEMA reports on financial status of insurance program

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

Section 13. Extension of pilot program for mitigation of severe 
        repetitive loss properties

    This section amends section 1361A of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4102a) by extending the 
current pilot program, which is set to expire September 30, 
2009, into 2011.

Section 14. Notice of availability of flood insurance and escrow in 
        RESPA good faith estimate

    This section amends subsection (c) of section 5 of the Real 
Estate Settlement Procedures Act of 1974 (12 U.S.C. 2604) by 
requiring that each good faith estimate include a conspicuous 
statement that flood insurance coverage for residential real 
estate is generally available under the national flood 
insurance program whether or not the real estate is located in 
an area having special flood hazards and that, to obtain such 
coverage, a home owner or purchaser should contact a hazard 
insurance provider. Also, the estimate should note that 
escrowing of flood insurance payments is required for many 
loans under the Flood Disaster Protection Act of 1973, but may 
be convenient and available for other loans as well.

Section 15. Reiteration of FEMA responsibilities under 2004 Reform Act

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

Section 16. Updating of flood maps and elevation standards

    This section directs the FEMA Director to establish a 
program within FEMA to review, update, and maintain national 
flood insurance program rate maps. This section also requires 
the FEMA Director to submit an annual report to Congress 
detailing the updating and modernization of the floodplain 
elevation maps. The first such report must be submitted to 
Congress by June 30, 2006 and each subsequent annual report 
must be submitted to Congress by June 30 of each year. This 
section also directs FEMA to give priority to the updating of 
flood maps and elevations for areas affected by Hurricane 
Katrina or Hurricane Rita. $300,000,000 is authorized for 
mapping for each of fiscal years 2007 through 2012. A technical 
mapping advisory council is reestablished at FEMA in order to 
make recommendations to the Director on mapping issues. This 
section also directs the Director to facilitate expedited 
community adoption of updated advisory flood level elevations 
after a flood disaster.

Section 17. National levee inventory

    This section directs the FEMA Director to maintain and 
periodically publish an inventory of levees located in the 
U.S., so that these levees can be identified for national flood 
insurance program purposes.

Section 18. Clarification of replacement cost provisions, forms, and 
        policy language

    This section directs FEMA, within 3 months of enactment, to 
issue regulations and revise materials that it makes available 
through the NFIP to clarify the applicability of replacement 
cost coverage under the national flood insurance program. This 
section also requires FEMA, within 3 months of enactment, to 
revise standard flood insurance policy materials so that rating 
and coverage descriptions are consistent with language used in 
other homeowners and property and casualty insurance policies.

Section 19. Authorization of additional FEMA staff

    This section authorizes necessary funds be appropriated for 
the Director of FEMA to employ additional staff necessary to 
carry out all of the responsibilities of the Director under 
this Act.

         Changes in Existing Law Made by the Bill, as Reported

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

NATIONAL FLOOD INSURANCE ACT OF 1968

           *       *       *       *       *       *       *

TITLE XIII--NATIONAL FLOOD INSURANCE

           *       *       *       *       *       *       *

CHAPTER I--THE NATIONAL FLOOD INSURANCE PROGRAM

           *       *       *       *       *       *       *

              NATURE AND LIMITATION OF INSURANCE COVERAGE

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

           *       *       *       *       *       *       *

               ESTABLISHMENT OF CHARGEABLE PREMIUM RATES

Sec. 1308. (a) * * *

           *       *       *       *       *       *       *

  (c) Actuarial Rate Properties.--[Subject only to the 
limitations provided under paragraphs (1) and (2), the] The 
chargeable rate shall not be less than the applicable estimated 
risk premium rate for such area (or subdivision thereof) under 
section 1307(a)(1) with respect to the following properties:
          (1) Post-firm properties.--Any property the 
        construction or substantial improvement of which the 
        Director determines has been started after December 31, 
        1974, or started after the effective date of the 
        initial rate map published by the Director under 
        paragraph (2) of section 1360 for the area in which 
        such property is located, whichever is later[, except 
        that the chargeable rate for properties under this 
        paragraph shall be subject to the limitation under 
        subsection (e)].
          (2) Nonresidential properties.--Any nonresidential 
        property.
          (3) Non-primary residences.--Any residential property 
        that is not the primary residence of an individual.
          [(2)] (4) Certain leased coastal and river 
        properties.--Any property leased from the Federal 
        Government (including residential and nonresidential 
        properties) that the Director determines is located on 
        the river-facing side of any dike, levee, or other 
        riverine flood control structure, or seaward of any 
        seawall or other coastal flood control structure.

           *       *       *       *       *       *       *

  (e) Annual Limitation on Premium Increases.--Except with 
respect to properties described under [paragraph (2) or (3)] 
paragraph (4) of subsection (c), and notwithstanding any other 
provision of this title, the chargeable risk premium rates for 
flood insurance under this title for any properties within any 
single risk classification may not be increased by an amount 
that would result in the average of such rate increases for 
properties within the risk classification during any 12-month 
period exceeding [10 percent] 15 percent of the average of the 
risk premium rates for properties within the risk 
classification upon the commencement of such 12-month period.

           *       *       *       *       *       *       *

Sec. 1314. FEMA participation in State disaster claims 
mediation programs.
  (a) Requirement to Participate.--In the case of the 
occurrence of a natural catastrophe that may result in flood 
damage claims under the national flood insurance program, upon 
a request made by the insurance commissioner of a State (or 
such other official responsible for regulating the business of 
insurance in the State) for the participation of 
representatives of the Director in a program sponsored by such 
State for nonbinding mediation of insurance claims resulting 
from a natural catastrophe, the Director shall cause 
appropriate representatives of national flood insurance program 
to participate in such State program to expedite settlement of 
any flood damage claims under the national flood insurance 
program resulting from such catastrophe.
  (b) Extent of Participation.--Participation by 
representatives of the Director required under subsection (a) 
with respect to flood damage claims resulting from a natural 
catastrophe shall include--
          (1) providing adjusters certified for purposes of the 
        national flood insurance program who are authorized to 
        settle claims against such program resulting from such 
        catastrophe in amounts up to the limits of policies 
        under such program;
          (2) requiring such adjusters to attend State-
        sponsored mediation meetings regarding flood insurance 
        claims resulting from such catastrophe at times and 
        places as may be arranged by the State;
          (3) participating in good-faith negotiations toward 
        the settlement of such claims with policyholders of 
        coverage made available under the national flood 
        insurance program; and
          (4) finalizing the settlement of such claims on 
        behalf of the national flood insurance program with 
        such policyholders.
  (c) Coordination.--Adjusters representing the national flood 
insurance program who participate pursuant to subsection (b)(1) 
in a State-sponsored mediation program with respect to a 
natural catastrophe shall at all times coordinate their 
activities with insurance officials of the State and 
representatives of insurers for the purpose of consolidating 
and expediting the settlement of claims under the national 
flood insurance program resulting from such catastrophe at the 
earliest possible time.

           *       *       *       *       *       *       *

                   [REPORT TO THE PRESIDENT] REPORTS

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

                  IDENTIFICATION OF FLOOD-PRONE AREAS

Sec. 1360. (a) * * *

           *       *       *       *       *       *       *

  (k) Program to Review, Update, and Maintain Flood Insurance 
Program Maps.--
          (1) In general.--The Director, in coordination with 
        the Technical Mapping Advisory Council established 
        pursuant to section 576 of the National Flood Insurance 
        Reform Act of 1994 (42 U.S.C. 4101 note) and section 
        16(c) of the Flood Insurance Reform and Modernization 
        Act of 2006, shall establish a program under which the 
        Director shall review, update, and maintain national 
        flood insurance program rate maps in accordance with 
        this subsection.
          (2) Inclusions.--
                  (A) Covered areas.--Each map updated under 
                this subsection shall include a depiction of--
                          (i) the 500-year floodplain;
                          (ii) areas that could be inundated as 
                        a result of the failure of a levee, as 
                        determined by the Director; and
                          (iii) areas that could be inundated 
                        as a result of the failure of a dam, as 
                        identified under the National Dam 
                        Safety Program Act (33 U.S.C. 467 et 
                        seq.).
                  (B) Other inclusions.--In updating maps under 
                this subsection, the Director may include--
                          (i) 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;
                          (ii) any relevant information of the 
                        Geographical Service on stream flows, 
                        watershed characteristics, and 
                        topography that is useful in the 
                        identification of flood hazard areas, 
                        as determined by the Director; and
                          (iii) a description of any hazard 
                        that might impact flooding, including, 
                        as determined by the Director--
                                  (I) land subsidence and 
                                coastal erosion areas;
                                  (II) sediment flow areas;
                                  (III) mud flow areas;
                                  (IV) ice jam areas; and
                                  (V) areas on coasts and 
                                inland that are subject to the 
                                failure of structural 
                                protective works, such as 
                                levees, dams, and floodwalls.
          (3) Standards.--In updating and maintaining maps 
        under this subsection, the Director shall 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 the Director, in conjunction 
                with State and local governments, to identify 
                and use consistent methods of data collection 
                and analysis in developing maps for communities 
                with similar flood risks, as determined by the 
                Director.
          (4) Hurricanes Katrina and Rita mapping priority.--In 
        updating and maintaining maps under this subsection, 
        the Director shall--
                  (A) give priority to the updating and 
                maintenance of maps of coastal areas affected 
                by Hurricane Katrina or Hurricane Rita to 
                provide guidance with respect to hurricane 
                recovery efforts; and
                  (B) use the process of updating and 
                maintaining maps under subparagraph (A) as a 
                model for updating and maintaining other maps.
          (5) Annual report.--Not later than June 30 of each 
        year, the Director shall submit a report to the 
        Congress describing, for the preceding 12-month period, 
        the activities of the Director under the program under 
        this section and the reviews and updates of flood 
        insurance program rate maps conducted under the 
        program. Each such annual report shall contain the most 
        recent report of the Technical Mapping Advisory Council 
        pursuant to section 576(c)(3) of the National Flood 
        Insurance Reform Act of 1994 (42 U.S.C. 4101 note).
          (6) Authorization of appropriations.--There is 
        authorized to be appropriated to the Director to carry 
        out this subsection $300,000,000 for each of fiscal 
        years 2007 through 2012.-

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

  (a)  * * *

           *       *       *       *       *       *       *

  (k) Funding.--
          (1) In general.--Pursuant to section 1310(a)(8), the 
        Director may use amounts from the National Flood 
        Insurance Fund to provide assistance under this section 
        in each of fiscal years 2005, 2006, 2007, 2008, [and 
        2009] 2009, 2010, and 2011, except that the amount so 
        used in each such fiscal year may not exceed 
        $40,000,000 and shall remain available until expended. 
        Notwithstanding any other provision of this title, 
        amounts made available pursuant to this subsection 
        shall not be subject to offsetting collections through 
        premium rates for flood insurance coverage under this 
        title.

           *       *       *       *       *       *       *

  (l) Termination.--The Director may not provide assistance 
under this section to any State or community after [September 
30, 2009] September 30, 2011.

                                APPEALS

Sec. 1363. (a) * * *

           *       *       *       *       *       *       *

  (h) Expedited Community Adoption of Post-Disaster Advisory 
Flood Elevations.--If the Director determines that it is 
appropriate to examine flood elevation determinations after 
flood-related disasters, to incorporate data gathered since the 
publication of an effective flood insurance rate map or other 
flood hazard map and to issue advisory flood elevations, the 
Director shall expedite the notification and publication 
procedures in this section. The Director shall require 
community adoption of the advisory flood elevation information 
under such expedited procedures for the purposes of local land 
use and control measures and for the purposes of facilitating 
flood-resistant reconstruction when Federal funds are made 
available. Expediting the notification and publication 
procedures shall be accomplished to preserve all rights to 
submit information and to appeal the Director's findings.

           *       *       *       *       *       *       *

                              ----------                              

FLOOD DISASTER PROTECTION ACT OF 1973

           *       *       *       *       *       *       *

TITLE I--EXPANSION OF NATIONAL FLOOD INSURANCE PROGRAM

           *       *       *       *       *       *       *

    FLOOD INSURANCE PURCHASE AND COMPLIANCE REQUIREMENTS AND ESCROW 
                                ACCOUNTS

Sec. 102. (a) * * *

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

          (5) Amount.--A civil monetary penalty under this 
        subsection may not exceed [$350] $2,000 for each 
        violation under paragraph (2) or paragraph (3). The 
        total amount of penalties assessed under this 
        subsection against any single regulated lending 
        institution or enterprise during any calendar year may 
        not exceed [$100,000] $1,000,000.
          (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). No penalty may be imposed under this 
        subsection on a regulated lending institution or 
        enterprise that has made a good faith effort to comply 
        with the requirements of the provisions referred to in 
        paragraph (2) or for any non-material violation of such 
        requirements.

           *       *       *       *       *       *       *

                              ----------                              

REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

           *       *       *       *       *       *       *

                      SPECIAL INFORMATION BOOKLETS

Sec. 5. (a) * * *

           *       *       *       *       *       *       *

  (c) Each lender shall include with the booklet a good faith 
estimate of the amount or range of charges for specific 
settlement services the borrower is likely to incur in 
connection with the settlement as prescribed by the Secretary. 
Such booklets shall take into consideration differences in real 
estate settlement procedures which may exist among the several 
States and territories of the United States and among separate 
political subdivisions within the same State and territory. 
Each such good faith estimate shall include the following 
conspicuous statements: (1) that flood insurance coverage for 
residential real estate is generally available under the 
National Flood Insurance Program whether or not the real estate 
is located in an area having special flood hazards and that, to 
obtain such coverage, a home owner or purchaser should contact 
a property insurance agent, broker, or company; and (2) that 
the escrowing of flood insurance payments is required for many 
loans under section 102(d) of the Flood Disaster Protection Act 
of 1973, and may be a convenient and available option with 
respect to other loans.

           *       *       *       *       *       *       *

                              ----------                              

NATIONAL FLOOD INSURANCE REFORM ACT OF 1994

           *       *       *       *       *       *       *

TITLE V--NATIONAL FLOOD INSURANCE REFORM

           *       *       *       *       *       *       *

Subtitle F--Miscellaneous Provisions

           *       *       *       *       *       *       *

SEC. 576. TECHNICAL MAPPING ADVISORY COUNCIL.

  (a) * * *
  (b) Membership.--
          (1) In general.--The Council shall consist of the 
        Director of the Federal Emergency Management Agency (in 
        this section referred to as the ``Director''), or the 
        Director's designee, and 10 additional members to be 
        appointed by the Director or the designee of the 
        Director, who shall be--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (E) a representative of the Corps of 
                Engineers of the United States Army;
                  [(E)] (F) a representative of the United 
                States Geologic Survey;
                  [(F)] (G) a representative of State geologic 
                survey programs;
                  [(G)] (H) a representative of State national 
                flood insurance coordination offices;
                  (I) a representative of local or regional 
                flood and stormwater agencies;
                  (J) a representative of State geographic 
                information coordinators;
                  [(H)] (K) a representative of a regulated 
                lending institution;
                  (L) a representative of flood insurance 
                servicing companies;
                  [(I)] (M) a representative of the Federal 
                Home Loan Mortgage Corporation; and
                  [(J)] (N) a representative of the Federal 
                National Mortgage Association.

           *       *       *       *       *       *       *

  [(c) Duties.--The Council shall--
          [(1) make recommendations to the Director on how to 
        improve in a cost-effective manner the accuracy, 
        general quality, ease of use, and distribution and 
        dissemination of flood insurance rate maps;
          [(2) recommend to the Director mapping standards and 
        guidelines for flood insurance rate maps; and
          [(3) submit an annual report to the Director 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 established pursuant to 
                the amendment made by section 675 ; and
                  [(C) a summary of recommendations made by the 
                Council to the Director.]
  (c) Duties.--The Council shall--
          (1) make recommendations to the Director for 
        improvements to the flood map modernization program 
        under section 1360(k) of the National Flood Insurance 
        Act of 1968 (42 U.S.C. 41010(k));
          (2) make recommendations to the Director for 
        maintaining a modernized inventory of flood hazard maps 
        and information; and
          (3) submit an annual report to the Director that 
        contains a description of the activities and 
        recommendations of the Council.

           *       *       *       *       *       *       *

  (k) Termination.--The Council shall terminate 5 years after 
the date on which all members of the Council have been 
appointed [under subsection (b)(1)] pursuant to subsection 
(b)(1) of this section and section 16(c)(3) of the Flood 
Insurance Reform and Modernization Act of 2006.

           *       *       *       *       *       *       *

                            ADDITIONAL VIEWS

                    Flood Insurance Report Language

    During deliberation of the underlying bill, I offered and 
withdrew an amendment that would, after date of enactment of 
the bill, require any purchaser of a pre-firm primary 
residential house to pay phased-in actuarial flood insurance 
prices using the same phase-in structure that non-residential 
and non-primary homes are subject to in the legislation.
    It is my hope that this language will be incorporated into 
the final version of the bill. I feel this change will provide 
additional resources to the flood insurance program in a fair 
way and not subject current home owners of pre-firm houses to 
unanticipated or unplanned for increases in the flood insurance 
premiums.
    Chairman Oxley, Ranking Member Frank and Congressman Baker 
all spoke favorably of the amendment and indicated that they 
would work with me on finding an appropriate way to include the 
language into the legislation moving forward.

                                                     Scott Garrett.

                                  
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