Union Calendar No. 232

103D CONGRESS

2D SESSION H. R. 3191

[Report No. 103–414]

A BILL

To revise the national flood insurance program to

for other purposes.mum coverage amounts under the program, andand shoreline erosion, and to increase the maxiduce damages to structures subject to floodingsistance for mitigation activities designed to redatory purchase of flood insurance, to provide aspromote compliance with requirements for manJANUARY 26, 1994

Reported with an amendment, committed to the Commitordered to be printed. tee of the Whole House on the State of the Union, and
IB

Union Calendar No. 232

103D CONGRESS

2D SESSION H. R. 3191

[Report No. 103–414]

To revise the national flood insurance program to promote compliance with

requirements for mandatory purchase of flood insurance, to provide assistance for mitigation activities designed to reduce damages to structures

subject to flooding and shoreline erosion, and to increase the maximum

coverage amounts under the program, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 30, 1993

Mr. KENNEDY (for himself and Mr. DEUTSCH) introduced the following bill;

which was referred to the Committee on Banking, Finance and Urban Affairs

JANUARY 26, 1994

Reported with an amendment, committed to the Committee of the Whole

House on the State of the Union, and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in italic]

[For text of introduced bill, see copy of bill as introduced on September 30, 1993]

A BILL

To revise the national flood insurance program to promote

compliance with requirements for mandatory purchase

of flood insurance, to provide assistance for mitigation

activities designed to reduce damages to structures subject to flooding and shoreline erosion, and to increase

the maximum coverage amounts under the program, and

for other purposes.
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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the ‘‘Na5 tional Flood Insurance Reform Act of 1994’’.

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title and table of contents.

Sec. 2. Declaration of purpose under the National Flood Insurance Act of 1968.

TITLE I—DEFINITIONS

Sec. 101. Flood Disaster Protection Act of 1973.

Sec. 102. National Flood Insurance Act of 1968.

TITLE II—COMPLIANCE AND INCREASED PARTICIPATION

Sec. 201. Existing flood insurance purchase requirements.

Sec. 202. Expanded flood insurance purchase requirements.

Sec. 203. Escrow of flood insurance payments.

Sec. 204. Placement of flood insurance by lenders.

Sec. 205. Penalties for failure to require flood insurance or notify.

Sec. 206. Ongoing compliance with flood insurance purchase requirements.

Sec. 207. Fees for determining applicability of flood insurance purchase requirements.

Sec. 208. Notice requirements.

Sec. 209. Standard hazard determination forms.

Sec. 210. Examinations regarding compliance.

Sec. 211. Financial Institutions Examination Council.

Sec. 212. Clerical amendments.

TITLE III—RATINGS AND INCENTIVES FOR COMMUNITY

FLOODPLAIN MANAGEMENT PROGRAMS

Sec. 301. Community rating system and incentives for community floodplain

management.

Sec. 302. Funding.

TITLE IV—MITIGATION OF FLOOD AND EROSION RISKS

Sec. 401. Repeal of flooded property purchase and loan program.

Sec. 402. Termination of erosion-threatened structures program.

Sec. 403. Mitigation assistance responsibilities in Federal Insurance Administration.

Sec. 404. State and community mitigation assistance program.

Sec. 405. Establishment of National Flood and Erosion Mitigation Fund.

Sec. 406. Insurance premium mitigation surcharge and erosion hazard zone surcharge.

Sec. 407. Limitations on new flood insurance coverage in erosion hazard areas.

Sec. 408. Study of mitigation insurance.

Sec. 409. Riverine erosion study.
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Sec. 410. Coordination with coastal zone management programs.

TITLE V—FLOOD INSURANCE TASK FORCE

Sec. 501. Flood Insurance Interagency Task Force.

TITLE VI—MISCELLANEOUS PROVISIONS

Sec. 601. Limitation on premium and surcharge increases.

Sec. 602. Maximum flood insurance coverage amounts.

Sec. 603. Flood insurance program arrangements with private insurance entities.

Sec. 604. Updating of flood maps and assessment and mapping of erosion hazard

zones.

Sec. 605. Study of economic effects of charging actuarially-based premium rates

for pre-FIRM structures.

Sec. 606. National Flood Insurance Fund.

Sec. 607. Effective dates of policies.

Sec. 608. Regulations.

Sec. 609. Relation to State and local laws.

1 SEC. 2. DECLARATION OF PURPOSE UNDER THE NATIONAL

2 FLOOD INSURANCE ACT OF 1968.

3 Section 1302(e) of the National Flood Insurance Act

4 of 1968 (42 U.S.C. 4001(e)) is amended—

5 (1) by redesignating clauses (3), (4), and (5), as

6 clauses (4), (5), and (6), respectively; and

7 (2) by inserting after the comma at the end of

8 clause (2) the following: ‘‘(3) encourage State and

9 local governments to protect natural and beneficial

10 floodplain functions that reduce flood-related losses,’’.

11 TITLE I—DEFINITIONS

12 SEC. 101. FLOOD DISASTER PROTECTION ACT OF 1973.

13 (a) IN GENERAL.—Section 3(a) of the Flood Disaster

14 Protection Act of 1973 (42 U.S.C. 4003(a)) is amended—

15 (1) by striking paragraph (5) and inserting the

16 following new paragraph:
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1 ‘‘(5) ‘Federal entity for lending regulation’

2 means the Board of Governors of the Federal Reserve

3 System, the Federal Deposit Insurance Corporation,

4 the Comptroller of the Currency, the Office of Thrift

5 Supervision, and the National Credit Union Admin6 istration, and with respect to a particular regulated

7 lending institution means the entity primarily re8 sponsible for the supervision, approval, or regulation

9 of the institution;’’;

10 (2) in paragraph (6), by striking the period at

11 the end and inserting a semicolon; and

12 (3) by inserting after paragraph (6) the follow13 ing new paragraphs:

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

15 agency that makes direct loans secured by improved

16 real estate or a mobile home, to the extent such agency

17 acts in such capacity;

18 ‘‘(8) ‘lender’ includes any regulated lending in19 stitution, other lending institution, and Federal agen20 cy lender, but does not include any agency engaged

21 primarily in the purchase of mortgage loans;

22 ‘‘(9) ‘other lending institution’ means any lend23 ing institution that is not subject to the supervision,

24 approval, regulation, or insuring of any Federal en25 tity for lending regulation and that is not a Federal
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1 agency lender, but does not include institutions en2 gaged primarily in the purchase of mortgage loans;

3 ‘‘(10) ‘regulated lending institution’ means any

4 bank, savings and loan association, credit union, or

5 similar institution subject to the supervision, ap6 proval, regulation, or insuring of a Federal entity for

7 lending regulation; and

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

9 receiving any scheduled periodic payments from a

10 borrower pursuant to the terms of a loan, including

11 amounts for taxes, insurance premiums, and other

12 charges with respect to the property, and making the

13 payments of principal and interest and such other

14 payments with respect to the amounts received from

15 the borrower as may be required pursuant to the

16 terms of the loan.’’.

17 (b) CONFORMING AMENDMENT.—Section 202(b) of the

18 Flood Disaster Protection Act of 1973 (42 U.S.C. 4106(b))

19 is amended by striking ‘‘Federal instrumentality described

20 in such section shall by regulation require the institutions’’

21 and inserting ‘‘Federal entity for lending regulation (with

22 respect to regulated lending institutions), the Secretary of

23 Housing and Urban Development (with respect to other

24 lending institutions), and the appropriate head of each Fed25 eral agency lender, shall by regulation require the lenders’’.
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1 SEC. 102. NATIONAL FLOOD INSURANCE ACT OF 1968.

2 (a) IN GENERAL.—Section 1370(a) of the National

3 Flood Insurance Act of 1968 (42 U.S.C. 4121(a)) is amend4 ed—

5 (1) in paragraph (5), by striking ‘‘and’’ at the

6 end;

7 (2) in paragraph (6), by striking the period at

8 the end and inserting a semicolon; and

9 (3) by inserting after paragraph (6) the follow10 ing new paragraphs:

11 ‘‘(7) the term ‘erosion hazard area’ means, based

12 on erosion rate information and other historical data

13 available, an area where erosion or avulsion is likely

14 to result in damage to or loss of buildings and infra15 structure within a 60-year period;

16 ‘‘(8) the term ‘readily movable structure’ means

17 a small permanent structure of less than 5,000 square

18 feet that is designed, sited, and built to accomplish re19 location at a reasonable cost relative to other struc20 tures of the same size and construction and that has

21 access of sufficient width and acceptable grade to per22 mit such relocation;

23 ‘‘(9) the term ‘coastal’ means relating to the

24 coastlines and bays of the tidal waters of the United

25 States or the shorelines of the Great Lakes, but does
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1 not refer to bayous, riverine areas, and riverine por2 tions of estuaries;

3 ‘‘(10) the term ‘Federal agency lender’ means a

4 Federal agency that makes direct loans secured by im5 proved real estate or a mobile home, to the extent such

6 agency acts in such capacity;

7 ‘‘(11) the term ‘Federal entity for lending regula8 tion’ means the Board of Governors of the Federal Re9 serve System, the Federal Deposit Insurance Corpora10 tion, the Comptroller of the Currency, the Office of

11 Thrift Supervision, and the National Credit Union

12 Administration, and with respect to a particular reg13 ulated lending institution means the entity primarily

14 responsible for the supervision, approval, or regula15 tion of the institution;

16 ‘‘(12) the term ‘lender’ includes any regulated

17 lending institution, other lending institution, and

18 Federal agency lender, but does not include any agen19 cy engaged primarily in the purchase of mortgage

20 loans;

21 ‘‘(13) the term ‘natural and beneficial floodplain

22 functions’ means (A) the functions associated with the

23 natural or relatively undisturbed floodplain that

24 moderate flooding, retain flood waters, reduce erosion

25 and sedimentation, and mitigate the effect of waves
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1 and storm surge from storms, and (B) ancillary bene2 ficial functions, including maintenance of water qual3 ity, recharge of ground water, and provision of fish4 eries and wildlife habitat;

5 ‘‘(14) the term ‘regulated lending institution’

6 means a bank, savings and loan association, credit

7 union, or similar institution subject to the super8 vision, approval, regulation, or insuring of a Federal

9 entity for lending regulation;

10 ‘‘(15) the term ‘other lending institution’ means

11 any lending institution that is not subject to the su12 pervision, approval, regulation, or insuring of any

13 Federal entity for lending regulation and that is not

14 a Federal agency lender, but does not include institu15 tions engaged primarily in the purchase of mortgage

16 loans; and

17 ‘‘(16) the term ‘servicer’ means the person re18 sponsible for receiving any scheduled periodic pay19 ments from a borrower pursuant to the terms of a

20 loan, including amounts for taxes, insurance pre21 miums, and other charges with respect to the prop22 erty, and making the payments of principal and in23 terest and such other payments with respect to the

24 amounts received from the borrower as may be re25 quired pursuant to the terms of the loan.’’.
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1 (b) CONFORMING AMENDMENT.—Section 1322(d) of

2 the National Flood Insurance Act of 1968 (42 U.S.C.

3 4029(d)) is amended by striking ‘‘federally supervised, ap4 proved, regulated or insured financial institution’’ and in5 serting ‘‘regulated lending institution, other lending insti6 tution, or Federal agency lender’’.

7 TITLE II—COMPLIANCE AND

8 INCREASED PARTICIPATION

9 SEC. 201. EXISTING FLOOD INSURANCE PURCHASE RE10 QUIREMENTS.

11 Section 102(a) of the Flood Disaster Protection Act of

12 1973 (42 U.S.C. 4012a(a)) is amended—

13 (1) by inserting after ‘‘(a)’’ the following: ‘‘RE14 QUIREMENT FOR FEDERAL ASSISTANCE FOR ACQUISI15 TION OR CONSTRUCTION.—’’; and

16 (2) by adding at the end the following new sen17 tence: ‘‘This subsection may not be construed to per18 mit the provision of any amount of financial assist19 ance with respect to any building or mobile home and

20 related personal property for which flood insurance is

21 required under this subsection, unless the require22 ments under this subsection are complied with in full.

23 The prohibitions and requirements of this subsection

24 relating to financial assistance may not be waived for

25 any purpose.’’.
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1 SEC. 202. EXPANDED FLOOD INSURANCE PURCHASE RE2 QUIREMENTS.

3 Section 102(b) of the Flood Disaster Protection Act of

4 1973 (42 U.S.C. 4012a(b)) is amended to read as follows:

5 ‘‘(b) REQUIREMENT FOR MORTGAGE LOANS.—

6 ‘‘(1) REGULATED LENDING INSTITUTIONS.—Each

7 Federal entity for lending regulation (after consulta8 tion and coordination with the Financial Institutions

9 Examination Council established under the Federal

10 Financial Institutions Examination Council Act of

11 1974) shall by regulation direct regulated lending in12 stitutions not to make, increase, extend, or renew,

13 after the expiration of 60 days following the date of

14 the enactment of this Act, any loan secured by im15 proved real estate or a mobile home located or to be

16 located in an area that has been identified by the Di17 rector as an area having special flood hazards and in

18 which flood insurance has been made available under

19 the National Flood Insurance Act of 1968, unless the

20 building or mobile home and any personal property

21 securing such loan is covered for the term of the loan

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

23 outstanding principal balance of the loan or the max24 imum limit of coverage made available under the Act

25 with respect to the particular type of property, which26 ever is less.
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1 ‘‘(2) OTHER LENDING INSTITUTIONS.—The Sec2 retary of Housing and Urban Development (after con3 sultation and coordination with the Financial Insti4 tutions Examination Council) shall by regulation di5 rect that—

6 ‘‘(A) any other lending institution may not

7 make, increase, extend, or renew any loan se8 cured by improved real estate consisting of a 1-

9 to 4-family residence or a mobile home located or

10 to be located in an area that has been identified

11 by the Director of the Federal Emergency Man12 agement Agency as an area having special flood

13 hazards and in which flood insurance has been

14 made available under the National Flood Insur15 ance Act of 1968, unless the building or mobile

16 home and any personal property securing such

17 loan is covered for the term of the loan by flood

18 insurance in the amount provided in paragraph

19 (1); and

20 ‘‘(B) any loan that is—

21 ‘‘(i) secured by improved real estate or

22 a mobile home located in an area that has

23 been identified at the time of the origina24 tion of the loan by the Director of the Fed25 eral Emergency Management Agency, as an
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1 area of special flood hazards and in which

2 flood insurance is available under the Na3 tional Flood Insurance Act of 1968, and

4 ‘‘(ii) purchased by the Government Na5 tional Mortgage Association,

6 is covered for the term of the loan by flood insur7 ance in the amount provided in paragraph (1).

8 ‘‘(3) FEDERAL AGENCY LENDERS.—A Federal

9 agency lender may not make, increase, extend, or

10 renew any loan secured by improved real estate or a

11 mobile home located or to be located in an area that

12 has been identified by the Director of the Federal

13 Emergency Management Agency as an area having

14 special flood hazards and in which flood insurance

15 has been made available under the National Flood In16 surance Act of 1968, unless the building or mobile

17 home and any personal property securing such loan

18 is covered for the term of the loan by flood insurance

19 in the amount provided in paragraph (1). The rel20 evant head of each Federal agency lender shall issue

21 any regulations necessary to carry out this para22 graph. Such regulations shall be consistent with and

23 substantially identical to the regulations issued under

24 paragraphs (1) and (2).
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1 ‘‘(4) GOVERNMENT-SPONSORED ENTERPRISES

2 FOR HOUSING.—The Federal National Mortgage Asso3 ciation and the Federal Home Loan Mortgage Cor4 poration shall implement procedures reasonably de5 signed to ensure that any loan that is—

6 ‘‘(A) secured by improved real estate or a

7 mobile home located in an area that has been

8 identified at the time of the origination of the

9 loan by the Director as an area of special flood

10 hazards and in which flood insurance is avail11 able under the National Flood Insurance Act of

12 1968, and

13 ‘‘(B) purchased by either such entity,

14 is covered for the term of the loan by flood insurance

15 in the amount provided in paragraph (1).

16 ‘‘(5) CONTESTED DETERMINATIONS.—If a bor17 rower under a loan disputes or challenges the deter18 mination of the lender that the improved real estate

19 or mobile home securing the loan is located in an

20 area of special flood hazards, the lender shall review

21 and consider any relevant information, as determined

22 by the Director, submitted to the lender by the bor23 rower.

24 ‘‘(6) APPLICABILITY.—Paragraphs (2) through

25 (4) shall apply only with respect to any loan made,
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1 increased, extended, or renewed after the expiration of

2 the 1-year period beginning on the date of the enact3 ment of the National Flood Insurance Reform Act of

4 1994.’’.

5 SEC. 203. ESCROW OF FLOOD INSURANCE PAYMENTS.

6 Section 102 of the Flood Disaster Protection Act of

7 1973 (42 U.S.C. 4012a) is amended by adding at the end

8 the following new subsection:

9 ‘‘(d) ESCROW OF FLOOD INSURANCE PAYMENTS.—

10 ‘‘(1) PRIVATE LENDERS.—For loans secured by

11 residential real estate, each Federal entity for lending

12 regulation (with respect to any loans of regulated

13 lending institutions) and the Secretary of Housing

14 and Urban Development (with respect to any loans of

15 other lending institutions), after consultation and co16 ordination with the Financial Institutions Examina17 tion Council, shall by regulation require that, if a

18 lender or other servicer of the loan requires the

19 escrowing of taxes, insurance premiums, fees, or any

20 other charges for a loan secured by residential real es21 tate or a mobile home, then all premiums and fees for

22 flood insurance under the National Flood Insurance

23 Act of 1968 for the residential real estate or mobile

24 home shall be paid to the lender or servicer of the

25 loan. Premiums and fees paid to the lender or servicer
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1 shall be paid in a manner sufficient to make pay2 ments as due for the duration of the loan. Upon re3 ceipt of the premiums, the lender or servicer of the

4 loan shall deposit the premiums in an escrow account

5 on behalf of the borrower. Upon receipt of a notice

6 from the Director or the provider of the insurance

7 that insurance premiums are due, the lender or

8 servicer shall pay from the escrow account to the pro9 vider of the insurance the amount of insurance pre10 miums owed.

11 ‘‘(2) FEDERAL AGENCY LENDERS.—The appro12 priate head of each Federal agency lender shall by

13 regulation require and provide for escrow and pay14 ment of any flood insurance premiums and fees relat15 ing to residential property securing loans made by

16 the Federal agency lender under the circumstances

17 and in the manner provided under paragraph (1).

18 Any regulations issued under this paragraph shall be

19 consistent with and substantially identical to the reg20 ulations issued under paragraph (1).

21 ‘‘(3) APPLICABILITY OF RESPA.—Escrow ac22 counts established pursuant to this subsection shall be

23 subject to the provisions of section 10 of the Real Es24 tate Settlement Procedures Act of 1974.
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1 ‘‘(4) APPLICABILITY.—This subsection shall

2 apply only with respect to any loan made, increased,

3 extended, or renewed after the expiration of the 1-year

4 period beginning on the date of the enactment of the

5 National Flood Insurance Reform Act of 1994.’’.

6 SEC. 204. PLACEMENT OF FLOOD INSURANCE BY LENDERS.

7 (a) ACTIONS REQUIRED BY LENDER.—Section 102 of

8 the Flood Disaster Protection Act of 1973 (42 U.S.C.

9 4012a), as amended by the preceding provisions of this Act,

10 is further amended by adding at the end the following new

11 subsection:

12 ‘‘(e) PLACEMENT OF FLOOD INSURANCE BY LEND13 ER.—

14 ‘‘(1) NOTIFICATION TO BORROWER OF LACK OF

15 COVERAGE.—If, at any time during the term of a

16 loan secured by improved real estate or by a mobile

17 home located in an area that has been identified by

18 the Director as an area having special flood hazards

19 and in which flood insurance is available under the

20 National Flood Insurance Act of 1968, the lender or

21 servicer for the loan determines that the building or

22 mobile home and any personal property securing the

23 loan is covered by flood insurance in an amount less

24 than the amount required for the property pursuant

25 to subsection (b), the lender or servicer shall notify the
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1 borrower under the loan that the borrower should ob2 tain, at the borrower’s expense, an amount of flood

3 insurance for the property that is not less than the

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

5 loan.

6 ‘‘(2) PURCHASE OF COVERAGE ON BEHALF OF

7 BORROWER.—If the borrower fails to purchase such

8 flood insurance within 60 days after such notifica9 tion, the lender or servicer for the loan shall purchase

10 the insurance on behalf of the borrower and may

11 charge the borrower for the cost of premiums and fees

12 incurred by the lender or servicer for the loan in pur13 chasing the insurance.

14 ‘‘(3) REVIEW OF DETERMINATION REGARDING

15 REQUIRED PURCHASE.—

16 ‘‘(A) IN GENERAL.—A borrower may re17 quest that the Director review a determination

18 that the improved real estate or mobile home se19 curing the loan is located in an area of special

20 flood hazards. Not later than 45 days after the

21 Director receives the request, the Director shall

22 review the determination and provide the bor23 rower with a letter stating whether or not the

24 property is in a special flood hazards area. The

25 determination of the Director shall be final.
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1 ‘‘(B) EFFECT OF DETERMINATION.—Any

2 person to whom a borrower provides a letter is3 sued by the Director pursuant to subparagraph

4 (A), stating that the property of the borrower is

5 not in an area of special flood hazards, shall

6 have no obligation under this title to require the

7 purchase of flood insurance on the property dur8 ing the 1-year period beginning upon the date

9 that such letter is provided.

10 ‘‘(4) APPLICABILITY.—This subsection shall

11 apply to all loans outstanding on or after the date of

12 enactment of the National Flood Insurance Reform

13 Act of 1994.’’.

14 SEC. 205. PENALTIES FOR FAILURE TO REQUIRE FLOOD IN15 SURANCE OR NOTIFY.

16 Section 102 of the Flood Disaster Protection Act of

17 1973 (42 U.S.C. 4012a), as amended by the preceding pro18 visions of this Act, is further amended by adding at the

19 end the following new subsections:

20 ‘‘(f) CIVIL MONETARY PENALTIES FOR FAILURE TO

21 REQUIRE FLOOD INSURANCE OR NOTIFY.—

22 ‘‘(1) CIVIL MONETARY PENALTIES AGAINST LEND23 ERS.—Any regulated or other lending institution that

24 is found to have a pattern or practice of committing

25 violations under paragraph (2) shall be assessed a
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1 civil penalty by the appropriate Federal entity for

2 lending regulation (with respect to regulated lending

3 institutions) or the Secretary of Housing and Urban

4 Development (with respect to other lending institu5 tions) in the amount provided under paragraph (5).

6 ‘‘(2) LENDER VIOLATIONS.—The violations re7 ferred to in paragraph (1) shall be—

8 ‘‘(A) making, increasing, extending, or re9 newing loans in violation of—

10 ‘‘(i) the regulations issued pursuant to

11 subsection (b) of this section;

12 ‘‘(ii) the escrow requirements under

13 subsection (d) of this section; or

14 ‘‘(iii) the notice requirements under

15 section 1364 of the National Flood Insur16 ance Act of 1968; or

17 ‘‘(B) failure to provide notice or purchase

18 flood insurance coverage in violation of sub19 section (e) of this section.

20 ‘‘(3) CIVIL MONETARY PENALTIES AGAINST

21 GSE’S.—If the Federal National Mortgage Association

22 or the Federal Home Loan Mortgage Corporation is

23 found by the Director of the Office of Federal Housing

24 Enterprise Oversight of the Department of Housing

25 and Urban Development to have a pattern or practice
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1 of purchasing loans in violation of the procedures es2 tablished pursuant to subsection (b)(4) of this section,

3 the Director of such Office shall assess a civil penalty

4 against such enterprise in the amount provided under

5 paragraph (5) of this subsection. For purposes of this

6 subsection, the term ‘enterprise’ means the Federal

7 National Mortgage Association or the Federal Home

8 Loan Mortgage Corporation.

9 ‘‘(4) NOTICE AND HEARING.—A penalty under

10 this subsection may be issued only after notice and an

11 opportunity for a hearing on the record.

12 ‘‘(5) AMOUNT.—A civil monetary penalty under

13 this subsection may not exceed $350 for each violation

14 under paragraph (2) or paragraph (3). The total

15 amount of penalties assessed under this subsection

16 against any single regulated lending institution, other

17 lending institution, or enterprise for any calendar

18 year may not exceed $100,000.

19 ‘‘(6) LENDER COMPLIANCE.—Notwithstanding

20 any State or local law, for purposes of this subsection,

21 any lender that purchases flood insurance or renews

22 a contract for flood insurance on behalf of or as an

23 agent of a borrower of a loan for which flood insur24 ance is required shall be considered to have complied

25 with the regulations issued under subsection (b).
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1 ‘‘(7) EFFECT OF TRANSFER ON LIABILITY.—Any

2 sale or other transfer of a loan by a lender who has

3 committed a violation under paragraph (1), that oc4 curs subsequent to the violation, shall not affect the li5 ability of the transferring lender with respect to any

6 penalty under this subsection. A lender shall not be

7 liable for any violations relating to a loan committed

8 by another lender who previously held the loan.

9 ‘‘(8) DEPOSIT OF PENALTIES.—Any penalties

10 collected under this subsection shall be paid into the

11 National Flood and Erosion Mitigation Fund under

12 section 1367 of the National Flood Insurance Act of

13 1968.

14 ‘‘(9) ADDITIONAL PENALTIES.—Any penalty

15 under this subsection shall be in addition to any civil

16 remedy or criminal penalty otherwise available.

17 ‘‘(10) STATUTE OF LIMITATIONS.—No penalty

18 may be imposed under this subsection after the expi19 ration of the 5-year period beginning on the date of

20 the occurrence of the violation for which the penalty

21 is authorized under this subsection.

22 ‘‘(g) OTHER ACTIONS TO REMEDY PATTERN OF NON23 COMPLIANCE.—

24 ‘‘(1) AUTHORITY OF FEDERAL ENTITIES FOR

25 LENDING REGULATION.—The head of the applicable
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1 Federal entity for lending regulation may require a

2 regulated lending institution to take such remedial

3 actions as are necessary to ensure that the regulated

4 lending institution complies with the requirements of

5 the national flood insurance program if the Federal

6 agency for lending regulation makes a determination

7 under paragraph (3) regarding the regulated lending

8 institution.

9 ‘‘(2) AUTHORITY OF SECRETARY OF HUD.—The

10 Secretary of Housing and Urban Development may

11 require another lending institution to take such reme12 dial actions as are necessary to ensure that the other

13 lending institution complies with the requirements of

14 the national flood insurance program if such Sec15 retary makes a determination under paragraph (3)

16 regarding the other lending institution.

17 ‘‘(3) DETERMINATION OF VIOLATIONS.—A deter18 mination under this paragraph shall be a finding

19 that—

20 ‘‘(A) the regulated lending institution or

21 other lending institution, as the case may be, has

22 engaged in a pattern and practice of noncompli23 ance in violation of the regulations issued pursu24 ant to subsection (b), (d), or (e) of this section
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1 or the notice requirements under section 1364 of

2 the National Flood Insurance Act of 1968; and

3 ‘‘(B) the regulated lending institution or

4 other lending institution, as the case may be, has

5 not demonstrated measurable improvement in

6 compliance despite the assessment of civil mone7 tary penalties under subsection (f).’’.

8 SEC. 206. ONGOING COMPLIANCE WITH FLOOD INSURANCE

9 PURCHASE REQUIREMENTS.

10 Section 102 of the Flood Disaster Protection Act of

11 1973 (42 U.S.C. 4012a), as amended by the preceding pro12 visions of this Act, is further amended by adding at the

13 end the following new subsection:

14 ‘‘(h) NOTIFICATION OF FLOOD HAZARDS TO LOAN

15 TRANSFEREE.—

16 ‘‘(1) IN GENERAL.—Except as provided in para17 graphs (2) through (5), before the sale or transfer of

18 any loan secured by improved real estate or a mobile

19 home, the seller or transferor of the loan shall deter20 mine whether the property is in an area that has been

21 designated by the Director as an area having special

22 flood hazards. The seller or transferor shall, before sale

23 or transfer, notify the purchaser or transferee and

24 any servicer of the loan in writing regarding the re25 sults of the determination. A determination under
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1 this paragraph shall be evidenced using the standard

2 hazard determination form under section 1365 of the

3 National Flood Insurance Act of 1968.

4 ‘‘(2) EXCEPTIONS.—For any loan secured by im5 proved real estate or a mobile home, a determination

6 and notice under paragraph (1) shall not be required

7 if, during the 5-year period ending on the date of the

8 sale or transfer of the loan—

9 ‘‘(A) a determination and notice under

10 paragraph (1) has been made for the property se11 cured by the loan; or

12 ‘‘(B)(i) the loan has been made, increased,

13 extended, or renewed; and

14 ‘‘(ii) the lender making, increasing, extend15 ing, or renewing the loan was subject, at the

16 time of such transaction, to regulations issued

17 pursuant to paragraph (1), (2), or (3) of sub18 section (b).

19 ‘‘(3) LOANS TRANSFERRED BY FDIC.—

20 ‘‘(A) IN GENERAL.—Except as provided in

21 subparagraph (B), for any loan secured by im22 proved real estate or a mobile home that is sold

23 or transferred by the Federal Deposit Insurance

24 Corporation acting in its corporate capacity or

25 in its capacity as conservator or receiver, the
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1 purchaser or transferee of the loan shall deter2 mine whether the property is in an area that has

3 been designated by the Director as an area hav4 ing special flood hazards.

5 ‘‘(B) EXCEPTIONS.—Such determination

6 and notice shall not be required for any loan—

7 ‘‘(i) sold or transferred to an entity

8 under the control of the Federal Deposit In9 surance Corporation; or

10 ‘‘(ii) for which the purchaser or trans11 feree exercises any available option to trans12 fer or put the loan back to the Federal De13 posit Insurance Corporation.

14 ‘‘(C) NOTICE TO DIRECTOR.—A purchaser

15 or transferee of a loan required to make a deter16 mination and notification under subparagraph

17 (A) shall notify the Director and any servicer of

18 the loan of the results of the determination

19 (using the standard hazard determination form

20 under section 1365 of the National Flood Insur21 ance Act of 1968) before the expiration of the 90-

22 day period beginning on the later of (i) the pur23 chase or transfer of the loan, or (ii) the expira24 tion of any option that the purchaser or trans-
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1 feree may have to transfer or put the loan back

2 to the Federal Deposit Insurance Corporation.

3 ‘‘(4) LOANS TRANSFERRED BY RTC.—

4 ‘‘(A) IN GENERAL.—For any loan secured

5 by improved real estate or a mobile home that is

6 sold or transferred by the Resolution Trust Cor7 poration acting in its corporate capacity or in

8 its capacity as a conservator or receiver, the pur9 chaser or transferee of the loan shall determine

10 whether the property is in an area that has been

11 designated by the Director as an area having

12 special flood hazards if—

13 ‘‘(i) the Resolution Trust Corporation

14 acquires the loan after the date of the effec15 tiveness of this subsection and sells or trans16 fers the loan before the expiration of the 12-

17 month period beginning on such effective

18 date; or

19 ‘‘(ii) the Corporation holds the loan on

20 the date of the effectiveness of this subsection

21 and sells or transfers the loan before the ex22 piration of the 6-month period beginning on

23 such effective date.

24 ‘‘(B) NOTICE TO DIRECTOR.—A purchaser

25 or transferee of a loan required to make a deter-
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1 mination and notification under subparagraph

2 (A) shall notify the Director and any servicer of

3 the loan of the results of the determination

4 (using the standard hazard determination form

5 under section 1365 of the National Flood Insur6 ance Act of 1968) before the expiration of the 90-

7 day period beginning upon the purchase or

8 transfer of the loan.

9 ‘‘(5) LOANS TRANSFERRED BY NCUA.—

10 ‘‘(A) IN GENERAL.—Except as provided in

11 subparagraph (C), for any loan secured by im12 proved real estate or a mobile home that is sold

13 or transferred by the National Credit Union Ad14 ministration acting in its corporate capacity or

15 in its capacity as a conservator or liquidating

16 agent, the purchaser or transferee of the loan

17 shall determine whether the property is in an

18 area that has been designated by the Director as

19 an area having special flood hazards.

20 ‘‘(B) NOTICE TO DIRECTOR.—A purchaser

21 or transferee of a loan required to make a deter22 mination and notification under subparagraph

23 (A) shall notify the Director and any servicer of

24 the loan of the results of the determination

25 (using the standard hazard determination form
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1 under section 1365 of the National Flood Insur2 ance Act of 1968) before the expiration of the 90-

3 day period beginning upon the purchase or

4 transfer of the loan.

5 ‘‘(C) EXCEPTION.—Such determination and

6 notice shall not be required for any loan sold or

7 transferred to an entity under the control of the

8 National Credit Union Administration.

9 ‘‘(6) APPLICABILITY.—This subsection shall

10 apply only with respect to any loan outstanding or

11 entered into after the expiration of the 1-year period

12 beginning on the date of the enactment of the Na13 tional Flood Insurance Reform Act of 1994.’’.

14 SEC. 207. FEES FOR DETERMINING APPLICABILITY OF

15 FLOOD INSURANCE PURCHASE REQUIRE16 MENTS.

17 Section 102 of the Flood Disaster Protection Act of

18 1973 (42 U.S.C. 4012a) as amended by the preceding provi19 sions of this Act, is further amended by adding at the end

20 the following new subsection:

21 ‘‘(i) FEE FOR DETERMINING LOCATION.—Notwith22 standing any other Federal or State law, any lender for

23 a loan described in paragraph (1), (2), or (3) of subsection

24 (b) may charge a reasonable fee (as determined by the Di25 rector) for the costs of determining whether the property se-
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1 curing the loan is located in an area of special flood haz2 ards, but only in accordance with the following require3 ments:

4 ‘‘(1) BORROWER FEE.—The borrower under such

5 a loan may be charged the fee, but only if the deter6 mination is made pursuant to—

7 ‘‘(A) the making, increasing, extending, or

8 renewing of the loan that is initiated by the bor9 rower; or

10 ‘‘(B) a revision or updating under section

11 1360(f) of the floodplain areas and flood-risk

12 zones or publication of a notice or compendia

13 under subsection (h) or (i) of section 1360 that

14 affects the area in which the property securing

15 the loan is located or that, in the determination

16 of the Director, may reasonably be considered to

17 require a determination under this subsection.

18 ‘‘(2) PURCHASER OR TRANSFEREE FEE.—The

19 purchaser or transferee of such a loan may be charged

20 the fee in the case of sale or transfer of the loan.’’.

21 SEC. 208. NOTICE REQUIREMENTS.

22 Section 1364 of the National Flood Insurance Act of

23 1968 (42 U.S.C. 4104a) is amended to read as follows:

24 ‘‘NOTICE REQUIREMENTS

25 ‘‘SEC. 1364. (a) NOTIFICATION OF SPECIAL FLOOD

26 HAZARDS.—
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1 ‘‘(1) REGULATED LENDING INSTITUTIONS.—Each

2 Federal entity for lending regulation, after consulta3 tion and coordination with the Financial Institutions

4 Examination Council, shall by regulation require reg5 ulated lending institutions, as a condition of making,

6 increasing, extending, or renewing any loan secured

7 by improved real estate or a mobile home located or

8 to be located in an area that has been identified by

9 the Director under this title or the Flood Disaster

10 Protection Act of 1973 as an area having special flood

11 hazards, to notify the purchaser or lessee (or obtain

12 satisfactory assurances that the seller or lessor has no13 tified the purchaser or lessee) and the servicer of the

14 loan of such special flood hazards, in writing, a rea15 sonable period in advance of the signing of the pur16 chase agreement, lease, or other documents involved in

17 the transaction. The regulations shall also require

18 that the lenders retain a record of the receipt of the

19 notices by the purchaser or lessee and the servicer.

20 ‘‘(2) OTHER LENDING INSTITUTIONS.—The Sec21 retary of Housing and Urban Development shall by

22 regulation require notification in the manner pro23 vided under paragraph (1) with respect to any loan

24 made by another lending institution and secured by

25 improved real estate consisting of a 1- to 4-family
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1 residence or a mobile home located or to be located in

2 an area that has been identified by the Director under

3 this title or the Flood Disaster Protection Act of 1973

4 as an area having special flood hazards. Any regula5 tions issued under this paragraph shall be consistent

6 with and substantially identical to the regulations is7 sued under paragraph (1) (except to the extent nec8 essary to provide for differences between the types of

9 loans for which notice is required under this para10 graph and the types for which notice is required

11 under paragraph (1)).

12 ‘‘(3) FEDERAL AGENCY LENDERS.—The appro13 priate head of each Federal agency lender shall by

14 regulation require notification in the manner pro15 vided under paragraph (1) with respect to any loan

16 that is made by the Federal agency lender and se17 cured by improved real estate or a mobile home lo18 cated or to be located in an area that has been identi19 fied by the Director under this title or the Flood Dis20 aster Protection Act of 1973 as an area having spe21 cial flood hazards. Any regulations issued under this

22 paragraph shall be consistent with and substantially

23 identical to the regulations issued under paragraph

24 (1).
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1 ‘‘(4) CONTENTS OF NOTICE.—Written notifica2 tion required under this subsection shall include—

3 ‘‘(A) a warning, in a form to be established

4 in consultation with and subject to the approval

5 of the Director, stating that the real estate or

6 mobile home securing the loan is located or is to

7 be located in an area having special flood haz8 ards;

9 ‘‘(B) a description of the flood insurance

10 purchase requirements under section 102(b) of

11 the Flood Disaster Protection Act of 1973;

12 ‘‘(C) a statement that flood insurance cov13 erage may be purchased under the national flood

14 insurance program and is also available from

15 private insurers; and

16 ‘‘(D) any other information that the Direc17 tor considers necessary to carry out the purposes

18 of the national flood insurance program.

19 ‘‘(b) NOTIFICATION OF CHANGE OF SERVICER.—

20 ‘‘(1) LENDING INSTITUTIONS.—Each Federal en21 tity for lending regulation (with respect to regulated

22 lending institutions) and the Secretary of Housing

23 and Urban Development (with respect to other lend24 ing institutions), after consultation and coordination

25 with the Financial Institutions Examination Council,
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1 shall by regulation require such institutions, as a con2 dition of making, increasing, extending, renewing,

3 selling, or transferring any loan described in sub4 section (a)(1), to notify the Director (or the designee

5 of the Director) in writing during the term of the

6 loan of the servicer of the loan. Such institutions shall

7 also notify the Director (or such designee) of any

8 change in the servicer of the loan, not later than 60

9 days after the effective date of such change. The regu10 lations under this subsection shall provide that upon

11 any change in the servicing of a loan, the duty to

12 provide notification under this subsection shall trans13 fer to the transferee servicer of the loan.

14 ‘‘(2) FEDERAL AGENCY LENDERS.—The appro15 priate head of each Federal agency lender shall by

16 regulation provide for notification in the manner pro17 vided under paragraph (1) with respect to any loan

18 described in subsection (a)(1) that is made by the

19 Federal agency lender. Any regulations issued under

20 this paragraph shall be consistent with and substan21 tially identical to the regulations issued under para22 graph (1) of this subsection.

23 ‘‘(c) NOTIFICATION OF EXPIRATION OF INSURANCE.—

24 The Director (or the designee of the Director) shall, not less

25 than 45 days before the expiration of any contract for flood
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1 insurance under this title, issue notice of such expiration

2 by first class mail to the owner of the property, the servicer

3 of any loan secured by the property covered by the contract,

4 and the owner of the loan.’’.

5 SEC. 209. STANDARD HAZARD DETERMINATION FORMS.

6 Chapter III of the National Flood Insurance Act of

7 1968 (42 U.S.C. 4101 et seq.) is amended by adding at the

8 end the following new section:

9 ‘‘STANDARD HAZARD DETERMINATION FORMS

10 ‘‘SEC. 1365. (a) DEVELOPMENT.—The Director, in

11 consultation with representatives of the mortgage and lend12 ing industry, the Federal entities for lending regulation, the

13 Federal agency lenders, and any other appropriate individ14 uals, shall develop standard written and electronic forms

15 for determining the flood hazard exposure of a property for

16 use in connection with loans secured by improved real estate

17 or a mobile home. The written and electronic forms shall

18 be established by regulations issued not later than 270 days

19 after the date of the enactment of the National Flood Insur20 ance Reform Act of 1994.

21 ‘‘(b) DESIGN AND CONTENTS.—

22 ‘‘(1) PURPOSE.—The form under subsection (a)

23 shall be designed to facilitate a determination of the

24 exposure to flood hazards of structures located on the

25 property to which the loan application relates. The
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1 form shall be designed to facilitate compliance with

2 the provisions of this title.

3 ‘‘(2) CONTENTS.—The form shall require identi4 fication of the type of flood-risk zone in which the

5 property is located, the complete map and panel

6 numbers for the property, and the date of the map

7 used for the determination, with respect to flood haz8 ard information on file with the Director. If the prop9 erty is not located in an area of special flood hazards

10 the form shall require a statement to such effect and

11 shall indicate the complete map and panel numbers

12 of the property. If the complete map and panel num13 bers for the property are not available because the

14 property is not located in a community that is par15 ticipating in the national flood insurance program or

16 because no map exists for the relevant area, the form

17 shall require a statement to such effect. The form shall

18 provide for inclusion or attachment of any relevant

19 documents indicating revisions or amendments to

20 maps.

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

22 regulation shall by regulation require the use of the form

23 under this section by regulated lending institutions. The ap24 propriate head of each Federal agency lender shall by regu25 lation provide for the use of the form with respect to any
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1 loan made by such Federal agency lender. The Secretary

2 of Housing and Urban Development shall by regulation re3 quire use of the form in connection with loans purchased

4 by Federal National Mortgage Association and the Federal

5 Home Loan Mortgage Corporation and the Government Na6 tional Mortgage Association. The Secretary of Housing and

7 Urban Development shall encourage the use of the form by

8 other lending institutions.

9 ‘‘(d) GUARANTEES REGARDING INFORMATION.—In

10 providing information regarding special flood hazards on

11 the form developed under this section (or otherwise required

12 of a lender not required to use the form under this section)

13 any lender making, increasing, extending, or renewing a

14 loan secured by improved real estate or a mobile home may

15 provide for the acquisition or determination of such infor16 mation to be made by a person other than such institution,

17 only to the extent such person guarantees the accuracy of

18 the information. The Director shall by regulations establish

19 requirements relating to the nature and manner of such

20 guarantees.

21 ‘‘(e) ELECTRONIC FORM.—The Federal entities for

22 lending regulation, the Secretary of Housing and Urban

23 Development, and the appropriate head of each Federal

24 agency lender shall by regulation require any lender using

25 the electronic form developed under this section with respect
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1 to any loan to make available upon the request of such Fed2 eral entity, Secretary, or agency head, a written form under

3 this section for such loan within 48 hours after such request.

4 ‘‘(f) EFFECTIVE DATE.—The regulations under this

5 section requiring use of the written and electronic forms es6 tablished pursuant to this section shall be issued together

7 with the regulations required under subsection (a) and shall

8 take effect upon the expiration of the 90-day period begin9 ning on such issuance.’’.

10 SEC. 210. EXAMINATIONS REGARDING COMPLIANCE.

11 (a) AMENDMENT TO FEDERAL DEPOSIT INSURANCE

12 ACT.—Section 10 of the Federal Deposit Insurance Act (12

13 U.S.C. 1820) is amended by adding at the end the following

14 new subsection:

15 ‘‘(h) FLOOD INSURANCE COMPLIANCE BY INSURED

16 DEPOSITORY INSTITUTIONS.—

17 ‘‘(1) EXAMINATIONS.—The appropriate Federal

18 banking agency shall, during each scheduled on-site

19 examination required by this section, determine

20 whether the insured depository institution is comply21 ing with the requirements of the national flood insur22 ance program.

23 ‘‘(2) REPORT.—

24 ‘‘(A) REQUIREMENT.—Not later than 1 year

25 after the date of enactment of the National Flood
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1 Insurance Reform Act of 1994 and biennially

2 thereafter for the next 4 years, each appropriate

3 Federal banking agency shall submit a report to

4 the Congress on compliance by insured deposi5 tory institutions with the requirements of the na6 tional flood insurance program.

7 ‘‘(B) CONTENTS.—The report shall include

8 a description of the methods used to determine

9 compliance, the number of institutions examined

10 during the reporting year, a listing and total

11 number of institutions found not to be in compli12 ance, actions taken to correct incidents of non13 compliance, and an analysis of compliance, in14 cluding a discussion of any trends, patterns, and

15 problems, and recommendations regarding rea16 sonable actions to improve the efficiency of the

17 examinations processes.’’.

18 (b) AMENDMENT TO FEDERAL CREDIT UNION ACT.—

19 Section 204 of the Federal Credit Union Act (12 U.S.C.

20 1784) is amended by adding at the end the following new

21 subsection:

22 ‘‘(e) FLOOD INSURANCE COMPLIANCE BY INSURED

23 CREDIT UNIONS.—

24 ‘‘(1) EXAMINATION.—The Board shall, during

25 each examination conducted under this section, deter-
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1 mine whether the insured credit union is complying

2 with the requirements of the national flood insurance

3 program.

4 ‘‘(2) REPORT.—

5 ‘‘(A) REQUIREMENT.—Not later than 1 year

6 after the date of enactment of the National Flood

7 Insurance Reform Act of 1994 and biennially

8 thereafter for the next 4 years, the Board shall

9 submit a report to Congress on compliance by

10 insured credit unions with the requirements of

11 the national flood insurance program.

12 ‘‘(B) CONTENTS.—The report shall include

13 a description of the methods used to determine

14 compliance, the number of insured credit unions

15 examined during the reporting year, a listing

16 and total number of insured credit unions found

17 not to be in compliance, actions taken to correct

18 incidents of noncompliance, and an analysis of

19 compliance, including a discussion of any

20 trends, patterns, and problems, and rec21 ommendations regarding reasonable actions to

22 improve the efficiency of the examinations proc23 esses.’’.

24 (c) AMENDMENT TO FEDERAL HOUSING ENTERPRISES

25 FINANCIAL SAFETY AND SOUNDNESS ACT OF 1992.—Sec-
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1 tion 1317 of the Federal Housing Enterprises Financial

2 Safety and Soundness Act of 1992 (12 U.S.C. 4517) is

3 amended by adding at the end the following new subsection:

4 ‘‘(g) FLOOD INSURANCE COMPLIANCE BY ENTER5 PRISES.—

6 ‘‘(1) EXAMINATION.—After the submission of the

7 report under section 210(d) of the National Flood In8 surance Reform Act of 1994, the Director shall, dur9 ing each annual examination of an enterprise con10 ducted under this section, determine whether the en11 terprise has established adequate procedures required

12 under section 102(b)(4) of the Flood Disaster Protec13 tion Act of 1973 and is complying with such proce14 dures.

15 ‘‘(2) EXCEPTION.—The provisions of paragraph

16 (1) shall not apply with respect to an enterprise if the

17 Director—

18 ‘‘(A) determines, pursuant to the report

19 under section 210(d) of the National Flood In20 surance Reform Act of 1994, that the enterprise

21 has established adequate procedures pursuant to

22 section 102(b)(4) of the Flood Disaster Protection

23 Act of 1973 and has a pattern of compliance

24 with such procedures; and
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1 ‘‘(B) certifies such finding in writing to the

2 Congress.

3 ‘‘(3) REPORT.—

4 ‘‘(A) REQUIREMENT.—Not later than 1 year

5 after the date of enactment of the National Flood

6 Insurance Reform Act of 1994 and biennially

7 thereafter for the next 4 years, the Director shall

8 submit a report to Congress on compliance by

9 the enterprises with the procedures established

10 pursuant to section 102(b)(4) of the Flood Disas11 ter Protection Act of 1973.

12 ‘‘(B) CONTENTS.—The report shall include

13 a description of the methods used to determine

14 compliance, identification of any enterprise

15 found not to be in compliance, actions taken to

16 correct incidents of noncompliance, and an anal17 ysis of compliance, including a discussion of any

18 trends, patterns, and problems, and rec19 ommendations regarding reasonable actions to

20 improve the efficiency of the examinations proc21 esses.’’.

22 (d) GAO REPORT ON GSE COMPLIANCE.—Not later

23 than 18 months after the date of enactment of this Act, the

24 Comptroller General of the United States shall submit a re25 port to the Congress and the Director of the Office of Federal
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1 Housing Enterprise Oversight of the Department of Hous2 ing and Urban Development regarding the procedures es3 tablished by the Federal National Mortgage Association and

4 the Federal Home Loan Mortgage Corporation pursuant to

5 section 102(b)(4) of the Flood Disaster Protection Act of

6 1973. The report shall include a description of such proce7 dures, an analysis of whether such procedures are sufficient

8 to comply with the requirements of such section, a deter9 mination of whether each enterprise has complied with such

10 procedures, a description of any actions taken by each en11 terprise to correct any incidents of noncompliance, and any

12 recommendations regarding reasonable actions to improve

13 the procedures established by the enterprises and compliance

14 with such procedures.

15 SEC. 211. FINANCIAL INSTITUTIONS EXAMINATION COUN16 CIL.

17 Section 1006 of the Federal Financial Institutions Ex18 amination Council Act of 1978 (12 U.S.C. 3305) is amend19 ed by adding at the end the following new subsection:

20 ‘‘(g) The council shall consult and assist the Federal

21 entities for lending regulation and the Secretary of Housing

22 and Urban Development in developing and coordinating

23 uniform standards and requirements for use by lenders as

24 provided under the National Flood Insurance Act of 1968

25 and the Flood Disaster Protection Act of 1973.’’.
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1 SEC. 212. CLERICAL AMENDMENTS.

2 Section 102 of the Flood Disaster Protection Act of

3 1973 (42 U.S.C. 4012a) is amended—

4 (1) by striking the section heading and inserting

5 the following new section heading:

6 ‘‘FLOOD INSURANCE PURCHASE AND COMPLIANCE

7 REQUIREMENTS AND ESCROW ACCOUNTS’’; and

8 (2) in subsection (c), by inserting ‘‘EXCEPTION

9 TO PURCHASE REQUIREMENTS FOR STATE-OWNED

10 PROPERTY.—’’ before ‘‘Notwithstanding’’.

11 TITLE III—RATINGS AND INCEN12 TIVES FOR COMMUNITY

13 FLOODPLAIN MANAGEMENT

14 PROGRAMS

15 SEC. 301. COMMUNITY RATING SYSTEM AND INCENTIVES

16 FOR COMMUNITY FLOODPLAIN MANAGE17 MENT.

18 Section 1315 of the National Flood Insurance Act of

19 1968 (42 U.S.C. 4022) is amended—

20 (1) by inserting after ‘‘SEC. 1315.’’ the following:

21 ‘‘(a) REQUIREMENT FOR PARTICIPATION IN FLOOD

22 INSURANCE PROGRAM.—’’; and

23 (2) by adding at the end the following new sub24 section:

25 ‘‘(b) COMMUNITY RATING SYSTEM AND INCENTIVES

26 FOR COMMUNITY FLOODPLAIN MANAGEMENT.—
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1 ‘‘(1) AUTHORITY AND GOALS.—The Director

2 shall carry out a community rating system program

3 to evaluate the measures adopted by areas (and sub4 divisions thereof) in which the Director has made

5 flood insurance coverage available to provide for ade6 quate land use and control provisions consistent with

7 the comprehensive criteria for such land management

8 and use under section 1361, to facilitate accurate

9 risk-rating, to promote flood insurance awareness,

10 and to complement adoption of more effective meas11 ures for floodplain and coastal erosion management.

12 ‘‘(2) INCENTIVES.—The program under this sub13 section shall provide incentives in the form of adjust14 ments in the premium rates for flood insurance cov15 erage in areas that the Director determines have

16 adopted and enforced the goals of the community rat17 ing system under this subsection. In providing incen18 tives under this paragraph, the Director may provide

19 for additional adjustments in premium rates for flood

20 insurance coverage in areas that the Director deter21 mines have implemented measures relating to the pro22 tection of natural and beneficial floodplain functions.

23 The Director may also provide for additional adjust24 ments in premium rates for flood insurance coverage

25 in areas within which such rates have increased as a
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1 result of induced flooding risk from flood control or

2 mitigation projects, as determined by the Director, ex3 cept that the adjustment shall not reduce premium

4 rates below the rate which would have been charged

5 absent the risk of induced flooding from the flood con6 trol or mitigation projects.

7 ‘‘(3) FUNDS.—The Director shall carry out the

8 program under this subsection with amounts, as the

9 Director determines necessary, from the National

10 Flood Insurance Fund under section 1310 and any

11 other amounts that may be appropriated for such

12 purpose.

13 ‘‘(4) REPORTS.—The Director shall submit a re14 port to the Congress regarding the program under this

15 subsection not later than the expiration of the 2-year

16 period beginning on the date of the enactment of the

17 National Flood Insurance Reform Act of 1994. The

18 Director shall submit a report under this paragraph

19 not less than every 2 years thereafter. Each report

20 under this paragraph shall include an analysis of the

21 cost-effectiveness and other accomplishments and

22 shortcomings of the program and any recommenda23 tions of the Director for legislation regarding the pro24 gram.’’.
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1 SEC. 302. FUNDING.

2 Section 1310(a) of the National Flood Insurance Act

3 of 1968 (42 U.S.C. 4017(a)) is amended—

4 (1) in paragraph (4), by striking ‘‘and’’ at the

5 end;

6 (2) by redesignating paragraph (5) as para7 graph (8); and

8 (3) by inserting after paragraph (4) the follow9 ing new paragraph:

10 ‘‘(5) for carrying out the program under section

11 1315(b);’’.

12 TITLE IV—MITIGATION OF

13 FLOOD AND EROSION RISKS

14 SEC. 401. REPEAL OF FLOODED PROPERTY PURCHASE AND

15 LOAN PROGRAM.

16 (a) REPEAL.—Section 1362 of the National Flood In17 surance Act of 1968 (42 U.S.C. 4103) is hereby repealed.

18 (b) TRANSITION PHASE.—Notwithstanding subsection

19 (a), during the 1-year period beginning on the date of the

20 enactment of this Act, the Director of the Federal Emer21 gency Management Agency may enter into loan and pur22 chase commitments as provided under section 1362 of such

23 Act (as in effect immediately before the enactment of this

24 Act).

25 (c) SAVINGS PROVISION.—Notwithstanding subsection

26 (a), the Director shall take any action necessary to comply
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1 with any purchase or loan commitment entered into before

2 the expiration of the period referred to in subsection (b)

3 pursuant to authority under section 1362 of the National

4 Flood Insurance Act of 1968 or subsection (b).

5 SEC. 402. TERMINATION OF EROSION-THREATENED STRUC6 TURES PROGRAM.

7 (a) IN GENERAL.—Section 1306 of the National Flood

8 Insurance Act of 1968 (42 U.S.C. 4013) is amended by

9 striking subsection (c).

10 (b) TRANSITION PHASE.—Notwithstanding subsection

11 (a), during the 1-year period beginning on the date of the

12 enactment of this Act, the Director of the Federal Emer13 gency Management Agency may pay amounts under flood

14 insurance contracts for demolition or relocation of struc15 tures as provided in section 1306(c) of the National Flood

16 Insurance Act of 1968 (as in effect immediately before the

17 enactment of this Act).

18 (c) SAVINGS PROVISION.—Notwithstanding subsection

19 (a), the Director shall take any action necessary to make

20 payments under flood insurance contracts pursuant to any

21 commitments made before the expiration of the period re22 ferred to in subsection (b) pursuant to the authority under

23 section 1306(c) of the National Flood Insurance Act of 1968

24 or subsection (b).
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1 SEC. 403. MITIGATION ASSISTANCE RESPONSIBILITIES IN

2 FEDERAL INSURANCE ADMINISTRATION.

3 Section 1105(a) of the Housing and Urban Develop4 ment Act of 1968 (42 U.S.C. 4129(a)) is amended—

5 (1) by inserting ‘‘(1)’’ after ‘‘(a)’’; and

6 (2) by adding at the end the following new para7 graph:

8 ‘‘(2) The Director of the Federal Emergency Manage9 ment Agency shall coordinate all mitigation activities, in10 cluding the administration of the program for mitigation

11 assistance under section 1366, under the Federal Insurance

12 Administrator. Such activities shall include the develop13 ment and implementation of various mitigation activities

14 and techniques, the provision of advice and assistance re15 garding mitigation to States, communities, and individ16 uals, including planning assistance under section 1366(b),

17 coordination with other Federal flood and erosion mitiga18 tion efforts, and coordination with State and local govern19 ments and public and private agencies and organizations

20 for collection and dissemination of information regarding

21 erosion.’’.

22 SEC. 404. STATE AND COMMUNITY MITIGATION ASSISTANCE

23 PROGRAM.

24 (a) IN GENERAL.—Chapter III of the National Flood

25 Insurance Act of 1968 (42 U.S.C. 4101 et seq.), as amended
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1 by the preceding provisions of this Act, is further amended

2 by adding at the end the following new section:

3 ‘‘STATE AND COMMUNITY MITIGATION ASSISTANCE

4 ‘‘SEC. 1366. (a) AUTHORITY.—The Director shall

5 carry out a program to provide financial assistance to

6 States and communities, using amounts made available

7 from the National Flood and Erosion Mitigation Fund

8 under section 1367, for planning and carrying out activi9 ties designed to reduce the risk of flood and erosion damage

10 to structures covered under contracts for flood insurance

11 under this title. Such financial assistance shall be made

12 available in the form of grants under subsection (b) for

13 planning assistance and grants under this section for carry14 ing out mitigation activities.

15 ‘‘(b) PLANNING ASSISTANCE GRANTS.—

16 ‘‘(1) IN GENERAL.—The Director may make

17 grants under this subsection to States and commu18 nities to assist in developing mitigation plans under

19 subsection (c).

20 ‘‘(2) FUNDING.—Of any amounts made available

21 from the National Flood and Erosion Mitigation

22 Fund for use under this section in any fiscal year, the

23 Director may use not more than $1,500,000 to pro24 vide planning assistance grants under this subsection.

25 ‘‘(3) LIMITATIONS.—
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1 ‘‘(A) TIMING.—A grant under this sub2 section may be awarded to a State or commu3 nity not more than once every 5 years and each

4 grant may cover a period of 1 to 3 years.

5 ‘‘(B) SINGLE GRANTEE AMOUNT.—A grant

6 for planning assistance may not exceed—

7 ‘‘(i) $150,000, to any State; or

8 ‘‘(ii) $50,000, to any community.

9 ‘‘(C) CUMULATIVE STATE GRANT AMOUNT.—

10 The sum of the amounts of grants under this

11 subsection in any fiscal year to any one State

12 and all communities located in such State may

13 not exceed $300,000.

14 ‘‘(c) MITIGATION PLAN REQUIREMENT.—To be eligible

15 to receive financial assistance under this section for mitiga16 tion activities, a State or community shall develop, and

17 have approved by the Director, a flood and erosion risk

18 mitigation plan (hereafter in this section referred to as a

19 ‘mitigation plan’), that is more protective against flood

20 losses and, if applicable, erosion losses, than the criteria es21 tablished by the Director under section 1361 and provides

22 such protection with respect to structures covered by con23 tracts for flood insurance under this title. The mitigation

24 plan shall include a comprehensive strategy for mitigation
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1 activities adopted by the State or community following a

2 public hearing.

3 ‘‘(d) NOTIFICATION OF APPROVAL.—The Director shall

4 notify a State or community submitting a mitigation plan

5 of the approval or disapproval of the plan not later than

6 120 days after submission of the plan. If the Director does

7 not approve a plan, the Director shall notify the State or

8 community in writing of the reasons for such disapproval.

9 ‘‘(e) ELIGIBLE MITIGATION ACTIVITIES.—

10 ‘‘(1) DETERMINATION.—Amounts provided under

11 this section (other than under subsection (b)) may be

12 used only for mitigation activities specified in a miti13 gation plan approved by the Director under sub14 section (d). The Director may approve only mitiga15 tion plans that specify mitigation activities that the

16 Director determines are technically feasible and cost17 effective. The Director shall provide assistance under

18 this section to the extent amounts are available in the

19 National Flood and Erosion Mitigation Fund pursu20 ant to appropriation Acts, subject only to the absence

21 of approvable mitigation plans.

22 ‘‘(2) ELIGIBLE ACTIVITIES.—The Director shall

23 determine whether mitigation activities described in a

24 mitigation plan submitted under subsection (d) by a
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1 State or community comply with the requirements

2 under paragraph (1). Such activities may include—

3 ‘‘(A) demolition or relocation of any struc4 ture located on land that is along the shore of a

5 lake or other body of water and is certified by

6 an appropriate State or local land use authority

7 to be subject to imminent collapse or subsidence

8 as a result of erosion or flooding;

9 ‘‘(B) elevation, relocation, demolition, or

10 floodproofing of structures, particularly struc11 tures incurring repetitive flood-related damage,

12 structures (including public structures) located

13 in special flood hazard areas or other areas of

14 flood risk, and structures (including public

15 structures) located in erosion hazard areas or

16 other areas of erosion risk;

17 ‘‘(C) acquisition by States and communities

18 of properties (including public properties) lo19 cated in special flood hazard areas or other areas

20 of flood risk, properties (including public prop21 erties) located in erosion hazard areas or other

22 areas of erosion risk, and properties substan23 tially damaged by flood, for public use, as the

24 Director determines is consistent with sound

25 land management and use in such area;
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1 ‘‘(D) minor physical mitigation efforts that

2 do not duplicate the flood prevention activities of

3 other Federal agencies and that lessen the fre4 quency or severity of flooding and decrease pre5 dicted flood damages, which shall not include

6 major flood control projects such as dikes, levees,

7 seawalls, groins, and jetties;

8 ‘‘(E) the provision of technical assistance by

9 States to communities and individuals to con10 duct eligible mitigation activities;

11 ‘‘(F) other activities that the Director con12 siders appropriate and specifies in regulation;

13 and

14 ‘‘(G) other mitigation activities not de15 scribed in subparagraphs (A) through (E) or the

16 regulations issued under subparagraph (F), that

17 are described in the mitigation plan of a State

18 or community.

19 ‘‘(f) MATCHING REQUIREMENT.—

20 ‘‘(1) IN GENERAL.—The Director may not pro21 vide mitigation assistance under this section to a

22 State or community in an amount exceeding 3 times

23 the amount that the State or community certifies, as

24 the Director shall require, that the State or commu25 nity will contribute from non-Federal funds to de-
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1 velop a mitigation plan under subsection (c) and to

2 carry out mitigation activities under the approved

3 mitigation plan of the State or community. In no

4 case shall any State or community in-kind contribu5 tion exceed one-half of the amount of non-Federal

6 funds contributed by the State or community.

7 ‘‘(2) NON-FEDERAL FUNDS.—For purposes of

8 this subsection, the term ‘non-Federal funds’ includes

9 State or local agency funds, in-kind contributions,

10 any salary paid to staff to carry out the mitigation

11 activities of the recipient, the value of the time and

12 services contributed by volunteers to carry out such

13 activities (at a rate determined by the Director), and

14 the value of any donated material or building and the

15 value of any lease on a building.

16 ‘‘(g) OVERSIGHT OF MITIGATION PLANS.—The Direc17 tor shall conduct oversight of recipients of mitigation assist18 ance under this section to ensure that the assistance is used

19 in compliance with the approved mitigation plans of the

20 recipients and that matching funds certified under sub21 section (f) are used in accordance with such certification.

22 ‘‘(h) RECAPTURE.—

23 ‘‘(1) NONCOMPLIANCE WITH PLAN.—If the Direc24 tor determines that a State or community that has re25 ceived mitigation assistance under this section has
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1 not carried out the mitigation activities as set forth

2 in the mitigation plan, the Director shall recapture

3 any unexpended amounts and deposit the amounts in

4 the National Flood and Erosion Mitigation Fund

5 under section 1367.

6 ‘‘(2) FAILURE TO PROVIDE MATCHING FUNDS.—

7 If the Director determines that a State or community

8 that has received mitigation assistance under this sec9 tion has not provided matching funds in the amount

10 certified under subsection (f), the Director shall recap11 ture any unexpended amounts of mitigation assist12 ance exceeding 3 times the amount of such matching

13 funds actually provided and deposit the amounts in

14 the National Flood and Erosion Mitigation Fund

15 under section 1367.

16 ‘‘(i) REPORTS.—Not later than 1 year after the date

17 of enactment of the National Flood Insurance Reform Act

18 of 1994 and biannually thereafter, the Director shall submit

19 a report to the Congress describing the status of flood and

20 erosion mitigation activities carried out with assistance

21 provided under this section.

22 ‘‘(j) DEFINITION OF COMMUNITY.—For purposes of

23 this section, the term ‘community’ means—

24 ‘‘(1) a political subdivision that (A) has zoning

25 and building code jurisdiction over a particular area
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1 of special flood hazards, and (B) is participating in

2 the national flood insurance program; or

3 ‘‘(2) a political subdivision of a State, or other

4 authority, that is designated to develop and admin5 ister a mitigation plan by political subdivisions, all

6 of which meet the requirements of paragraph (1).’’.

7 (b) REGULATIONS.—Not later than 6 months after date

8 of enactment of this Act, the Director of the Federal Emer9 gency Management Agency shall issue regulations to carry

10 out section 1366 of the National Flood Insurance Act of

11 1968, as added by subsection (a).

12 SEC. 405. ESTABLISHMENT OF NATIONAL FLOOD AND ERO13 SION MITIGATION FUND.

14 Chapter III of the National Flood Insurance Act of

15 1968 (42 U.S.C. 4101 et seq.), as amended by the preceding

16 provisions of this Act, is further amended by adding at the

17 end the following new section:

18 ‘‘NATIONAL FLOOD AND EROSION MITIGATION FUND

19 ‘‘SEC. 1367. (a) ESTABLISHMENT AND AVAILABIL20 ITY.—The Director shall establish in the Treasury of the

21 United States a fund to be known as the National Flood

22 and Erosion Mitigation Fund, which shall be credited with

23 amounts described in subsection (b) and shall be available,

24 to the extent provided in appropriation Acts, for providing

25 assistance under section 1366.
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1 ‘‘(b) CREDITS.—The National Flood and Erosion

2 Mitigation Fund shall be credited with—

3 ‘‘(1) any premium surcharges assessed under sec4 tion 1308(f);

5 ‘‘(2) any penalties collected under section 102(f)

6 of the Flood Disaster Protection Act of 1973; and

7 ‘‘(3) any amounts recaptured under section

8 1366(i).

9 ‘‘(c) INVESTMENT.—If the Director determines that the

10 amounts in the National Flood and Erosion Mitigation

11 Fund are in excess of amounts needed under subsection (a),

12 the Director may invest any excess amounts the Director

13 determines advisable in interest-bearing obligations issued

14 or guaranteed by the United States.

15 ‘‘(d) REPORT.—The Director shall submit a report to

16 the Congress not later than the expiration of the 1-year pe17 riod beginning on the date of the enactment of this Act and

18 not less than once during each successive 2-year period

19 thereafter. The report shall describe the status of the Fund

20 and any activities carried out with amounts from the

21 Fund.’’.
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1 SEC. 406. INSURANCE PREMIUM MITIGATION SURCHARGE

2 AND EROSION HAZARD ZONE SURCHARGE.

3 Section 1308 of the National Flood Insurance Act of

4 1968 (42 U.S.C. 4015) is amended by adding at the end

5 the following new subsections:

6 ‘‘(f) INSURANCE PREMIUM MITIGATION SUR7 CHARGE.—

8 ‘‘(1) ASSESSMENT.—Notwithstanding any other

9 provision of this title, the Director shall assess, with

10 respect to each contract for flood insurance coverage

11 under this title issued or renewed after the date of the

12 enactment of the National Flood Insurance Reform

13 Act of 1994, a mitigation surcharge of—

14 ‘‘(A) $10 per policy term, for policies hav15 ing a total coverage amount of $150,000 or less

16 that cover structures that are principal resi17 dences;

18 ‘‘(B) $20 per policy term, for policies hav19 ing a total coverage amount of more than

20 $150,000 that cover structures that are principal

21 residences; and

22 ‘‘(C) the amount established by the Director

23 not to exceed $40 per policy term, for policies

24 covering other structures.

25 ‘‘(2) DEPOSIT IN MITIGATION FUND.—Any miti26 gation surcharges collected shall be paid into the Na-
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1 tional Flood and Erosion Mitigation Fund under sec2 tion 1367.

3 ‘‘(3) EXEMPTION.—The mitigation surcharges

4 shall not be subject to any agents’ commissions, com5 pany expenses allowances, or State or local premium

6 taxes.

7 ‘‘(g) EROSION HAZARD ZONE SURCHARGES.—The Di8 rector shall assess a surcharge for each contract for flood

9 insurance coverage under this title covering an existing

10 structure that is located within the 30-year or 60-year ero11 sion hazard zone established under section 1360(j). Subject

12 only to the limitation under subsection (e), the surcharge

13 shall be in the amount necessary so that, based on the risk

14 involved and sound actuarial principles, the sum of the

15 amounts charged for a property for flood insurance pre16 miums and the surcharge under this subsection is equal to

17 the full actuarial risk premium rate determined under sec18 tion 1307(a)(1) for the area in which the property is lo19 cated.’’.

20 SEC. 407. LIMITATIONS ON NEW FLOOD INSURANCE COV21 ERAGE IN EROSION HAZARD AREAS.

22 The National Flood Insurance Act of 1968 (42 U.S.C.

23 4001 et seq.) is amended by inserting after section 1313

24 the following new section:
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1 ‘‘SEC. 1314. PROPERTIES LOCATED WITHIN 30-YEAR AND 60-

2 YEAR EROSION HAZARD ZONES.

3 ‘‘(a) PROPERTIES LOCATED WITHIN 30-YEAR ERO4 SION HAZARD ZONE.—After the establishment of erosion

5 hazard zones under section 1360(j), the Director may not

6 make flood insurance available within a 30-year erosion

7 hazard zone with respect to any new—

8 ‘‘(1) construction; or

9 ‘‘(2) addition to an existing structure, if the ad10 dition makes the structure not a readily movable

11 structure.

12 ‘‘(b) PROPERTIES LOCATED WITHIN 60-YEAR ERO13 SION HAZARD AREA AND OUTSIDE 30-YEAR EROSION HAZ14 ARD ZONE.—After the establishment of erosion hazard zones

15 under section 1360(j), the Director may not make flood in16 surance available with respect to any new—

17 ‘‘(1) nonresidential structure;

18 ‘‘(2) residential structure that is not a readily

19 movable structure; or

20 ‘‘(3) addition to an existing structure, if the ad21 dition makes the structure not a readily movable

22 structure;

23 that is constructed or relocated landward of the 30-year ero24 sion hazard zone and within the 60-year erosion hazard

25 zone established by the Director under such section.
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1 ‘‘(c) TREATMENT OF EXISTING STRUCTURES.—This

2 section may not be construed to prohibit the renewal or con3 tinuation of coverage for any flood insurance policy under

4 this title covering a structure that suffers substantial dam5 age, regardless of whether the structure is relocated or recon6 structed. For purposes of this subsection, the term ‘substan7 tial damage’ means damage of any origin sustained by a

8 structure that is of such an extent that the cost of restoring

9 the structure to its condition before such damage would

10 equal or exceed 50 percent of the market value of the struc11 ture immediately before the damage occurred.

12 ‘‘(d) STATE EROSION HAZARD MANAGEMENT PRO13 GRAM.—Notwithstanding subsections (a) and (b), if upon

14 the date of the enactment of the National Flood Insurance

15 Reform Act of 1994 a State has adopted and has in effect

16 an erosion management program that, in the determination

17 of the Director, has enforceable provisions prohibiting or re18 stricting new construction or additions to existing struc19 tures within the 30-year erosion hazard zone, the Director

20 shall continue to make flood insurance under this title

21 available for new construction and additions to existing

22 structures landward of the 30-year erosion zone that are

23 otherwise in conformance with all applicable State and

24 local laws, regulations, and ordinances relating to building

25 design, development, and erosion.’’.
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1 SEC. 408. STUDY OF MITIGATION INSURANCE.

2 (a) STUDY.—The Director of the Federal Emergency

3 Management Agency shall conduct a study to determine the

4 feasibility of providing, as part of the flood insurance pol5 icy, insurance coverage to provide for increases in the costs

6 of repair and reconstruction of repetitively and severely

7 flood-damaged insured buildings, in order to repair, recon8 struct, or otherwise mitigate future hazards to those build9 ings to comply with local building codes and floodplain

10 management ordinances to the greatest extent possible. In

11 conducting the study, the Director shall seek involvement

12 from other Federal, State, and local agencies, and represen13 tation from the insurance, construction, and floodplain

14 management interests. Under the study the Director shall—

15 (1) identify potential activities related to repair,

16 reconstruction, or otherwise achieving mitigation re17 quired to comply with standards under the national

18 flood insurance program and local building codes,

19 and evaluate the costs of such activities;

20 (2) evaluate how such insurance coverage could

21 be utilized to achieve economically justified acquisi22 tion or relocation of certain structures under certain

23 circumstances;

24 (3) evaluate the cost of providing the additional

25 coverage and investigate a full range of measures for
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1 funding such costs, including changes in coverage,

2 rates, and deductibles;

3 (4) evaluate the effect changes identified in para4 graph (3) would have on the entire policy base, the

5 cost of flood insurance, retention of policies, market6 ing of policies, the number and magnitude of claims

7 paid, and the economic soundness and value of flood8 prone property, and provide detail on such effects by

9 State and flood hazard zone; and

10 (5) identify mechanisms required to identify

11 qualifying structures, determine appropriate mitiga12 tion measures, coordinate with State and local offi13 cials, provide consistency with State and local plans

14 and programs, deliver the increased insurance pay15 ments, and verify appropriate actions by policy16 holders.

17 (b) REPORT.—The Director shall submit to the Con18 gress a report describing the study not later than the expira19 tion of the 18-month period beginning on the date of the

20 enactment of this Act. The report shall include conclusions

21 and recommendations of the Director in conducting the

22 study.

23 SEC. 409. RIVERINE EROSION STUDY.

24 (a) STUDY.—The Director of the Federal Emergency

25 Management Agency shall conduct a study to determine the
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1 feasibility of identifying and establishing erosion rates for

2 communities subject to riverine erosion hazards and the best

3 manner of identifying and establishing such rates. Under

4 the study the Director shall—

5 (1) investigate and assess existing and state-of6 the-art technical methodologies for assessing riverine

7 erosion;

8 (2) examine natural riverine processes, environ9 mental conditions, and human-induced changes to the

10 banks of rivers and streams, examples of erosion and

11 likely causes, and examples of erosion control and

12 reasons for their performance; and

13 (3) analyze riverine erosion management strate14 gies, the technical standards, methods, and data nec15 essary to support such strategies, and methods of ad16 ministering such strategies through the national flood

17 insurance program.

18 (b) REPORT.—The Director shall submit a report to

19 the Congress regarding the findings and conclusions of the

20 study under this section not later than the expiration of

21 the 2-year period beginning on the date of the enactment

22 of this Act. The report shall include any recommendations

23 of the Director regarding appropriate methods and ap24 proaches for identifying and determining riverine erosion
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1 rates and management strategies relating to riverine ero2 sion.

3 SEC. 410. COORDINATION WITH COASTAL ZONE MANAGE4 MENT PROGRAMS.

5 (a) IN GENERAL.—In implementing this title and the

6 amendments made by this title, the Director of the Federal

7 Emergency Management Agency shall consult with the

8 Under Secretary of Commerce for Oceans and Atmosphere

9 and representatives from State coastal zone management

10 programs to promote full coordination of the erosion man11 agement provisions of the National Flood Insurance Act of

12 1968 as amended by this Act, and the provisions of the

13 Coastal Zone Management Act of 1972. The Director shall,

14 to the greatest extent possible, utilize State management

15 programs approved under section 306 of the Coastal Zone

16 Management Act of 1972 to facilitate development and im17 plementation of regulations and guidelines for this title.

18 (b) COORDINATION REPORT.—The Director shall pre19 pare a report that details the proposed mechanisms for

20 achieving the coordination required in subsection (a). In

21 preparing the report, the Director shall consult with the

22 Under Secretary of Commerce for Oceans and Atmosphere.

23 This report shall be submitted to the Congress not later than

24 2 years after the date of enactment of this Act.
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1 TITLE V—FLOOD INSURANCE

2 TASK FORCE

3 SEC. 501. FLOOD INSURANCE INTERAGENCY TASK FORCE.

4 (a) ESTABLISHMENT.—There is hereby established an

5 interagency task force to be known as the Flood Insurance

6 Task Force (in this section referred to as the ‘‘Task Force’’).

7 (b) MEMBERSHIP.—

8 (1) IN GENERAL.—The Task Force shall be com9 posed of 11 members, who shall be the designees of—

10 (A) the Federal Insurance Administrator;

11 (B) the Federal Housing Commissioner;

12 (C) the Secretary of Veterans Affairs;

13 (D) the Administrator of the Farmers Home

14 Administration;

15 (E) the Administrator of the Small Busi16 ness Administration;

17 (F) a designee of the Financial Institutions

18 Examination Council;

19 (G) the chairman of the Board of Directors

20 of the Federal Home Loan Mortgage Corpora21 tion;

22 (H) the chairman of the Board of Directors

23 of the Federal National Mortgage Association;

24 (I) the Under Secretary of Commerce for

25 Oceans and Atmosphere;
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1 (J) the Director of the United States Fish

2 and Wildlife Service; and

3 (K) the Administrator of the Environmental

4 Protection Agency.

5 (2) QUALIFICATIONS.—Members of the Task

6 Force shall be designated for membership on the Task

7 Force by reason of demonstrated knowledge and com8 petence regarding the national flood insurance pro9 gram.

10 (c) DUTIES.—The Task Force shall carry out the fol11 lowing duties:

12 (1) Make recommendations to the head of each

13 Federal agency and enterprise referred to under sub14 section (b)(1) regarding establishment or adoption of

15 standardized enforcement procedures among such

16 agencies and corporations responsible for enforcing

17 compliance with the requirements under the national

18 flood insurance program to ensure fullest possible

19 compliance with such requirements.

20 (2) Conduct a study of the extent to which Fed21 eral agencies and the secondary mortgage market can

22 provide assistance in ensuring compliance with the

23 requirements under the national flood insurance pro24 gram and submit to the Congress a report describing

25 the study and any conclusions.
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1 (3) Conduct a study of the extent to which exist2 ing programs of Federal agencies and corporations for

3 compliance with the requirements under the national

4 flood insurance program can serve as a model for

5 other Federal agencies responsible for enforcing com6 pliance, and submit to the Congress a report describ7 ing the study and any conclusions.

8 (4) Develop guidelines regarding enforcement

9 and compliance procedures, based on the studies and

10 findings of the Task Force, and publish the guidelines

11 in a usable format.

12 (d) NONCOMPENSATION.—Members of the Task Force

13 shall receive no additional pay by reason of their service

14 on the Task Force.

15 (e) CHAIRPERSON.—The members of the Task Force

16 shall elect one member as chairperson of the Task Force.

17 (f) MEETINGS AND ACTION.—The Task Force shall

18 meet at the call of the chairman or a majority of the mem19 bers of the Task Force and may take action by a vote of

20 the majority of the members. The Federal Insurance Admin21 istrator shall coordinate and call the initial meeting of the

22 Task Force.

23 (g) OFFICERS.—The chairperson of the Task Force

24 may appoint any officers to carry out the duties of the Task

25 Force under subsection (c).
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1 (h) STAFF OF FEDERAL AGENCIES.—Upon request of

2 the chairperson of the Task Force, the head of any of the

3 Federal agencies and corporations referred to under sub4 section (b)(1) may detail, on a nonreimbursable basis, any

5 of the personnel of such agency to the Task Force to assist

6 the Task Force in carrying out its duties under this Act.

7 (i) POWERS.—In carrying out this section, the Task

8 Force may hold hearings, sit and act at times and places,

9 take testimony, receive evidence and assistance, provide in10 formation, and conduct research as the Task Force considers

11 appropriate.

12 (j) SUBCOMMITTEE ON NATURAL AND BENEFICIAL

13 FUNCTIONS OF THE FLOODPLAIN.—The members of the

14 Task Force appointed under subparagraphs (I), (J), and

15 (K) of subsection (b)(1) shall constitute a select subcommit16 tee which, in addition to their duties under subsection (c),

17 shall make recommendations regarding the implementation

18 of the provisions of the National Flood Insurance Act of

19 1968 that deal with protection of the natural and beneficial

20 functions of the floodplain.

21 (k) TERMINATION.—The Task Force shall terminate

22 upon the expiration of the 24-month period beginning upon

23 the designation of the last member to be designated under

24 subsection (b)(1).
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1 TITLE VI—MISCELLANEOUS

2 PROVISIONS

3 SEC. 601. LIMITATION ON PREMIUM AND SURCHARGE IN4 CREASES.

5 (a) PROPERTY-SPECIFIC LIMITATION.—Section 1308

6 of the National Flood Insurance Act of 1968 (42 U.S.C.

7 4013(b)) is amended—

8 (1) in subsection (c), by striking ‘‘Notwithstand9 ing any other provision of this title’’ and inserting

10 ‘‘Subject only to the limitation under subsection (e)’’;

11 and

12 (2) by inserting after subsection (d) the following

13 new subsection:

14 ‘‘(e) ANNUAL LIMITATION ON PREMIUM AND SUR15 CHARGE INCREASES.—Notwithstanding any other provi16 sion of this title, the sum of the risk premium rate for flood

17 insurance and the erosion hazard zone surcharge that are

18 charged under this title for any property may not be in19 creased in an amount that would result in the sum of such

20 rate and surcharge increases for the property during any

21 12-month period exceeding 10 percent of the sum of the

22 amounts of the risk premium rate and erosion hazard zone

23 surcharge applicable to the property upon the commence24 ment of such 12-month period.’’.
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1 (b) REPEAL OF PROGRAM-WIDE LIMITATION.—Sub2 section (d) of section 541 of the Housing and Community

3 Development Act of 1987 (42 U.S.C. 4015 note) is hereby

4 repealed.

5 SEC. 602. MAXIMUM FLOOD INSURANCE COVERAGE

6 AMOUNTS.

7 (a) IN GENERAL.—Section 1306(b) of the National

8 Flood Insurance Act of 1968 (42 U.S.C. 4013(b)) is amend9 ed as follows:

10 (1) RESIDENTIAL PROPERTY.—In paragraph (2),

11 by striking ‘‘an amount of $150,000 under the provi12 sions of this clause’’ and inserting the following: ‘‘a

13 total amount (including such limits specified in para14 graph (1)(A)(i)) equal to the dollar amount limita15 tion pursuant to section 305(a)(2) of the Federal

16 Home Loan Mortgage Corporation Act in effect for a

17 single-family residence’’.

18 (2) RESIDENTIAL PROPERTY CONTENTS.—In

19 paragraph (3), by striking ‘‘an amount of $50,000

20 under the provisions of this clause’’ and inserting the

21 following: ‘‘a total amount (including such limits

22 specified in paragraph (1)(A)(ii)) of $100,000’’.

23 (3) NONRESIDENTIAL PROPERTY AND CON24 TENTS.—By striking paragraph (4) and inserting the

25 following new paragraph:
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1 ‘‘(4) in the case of any nonresidential property,

2 including churches, for which the risk premium rate

3 is determined in accordance with the provisions of

4 section 1307(a)(1), additional flood insurance in ex5 cess of the limits specified in subparagraphs (B) and

6 (C) of paragraph (1) shall be made available to every

7 insured upon renewal and every applicant for insur8 ance, in respect to any single structure, up to a total

9 amount (including such limits specified in subpara10 graph (B) or (C) or paragraph (1), as applicable) of

11 $500,000 for each structure and $500,000 for any

12 contents related to each structure; and’’.

13 (b) REMOVAL OF CEILING ON COVERAGE REQUIRED.—

14 Section 1306(b) of the National Flood Insurance Act of

15 1968 (42 U.S.C. 4013(b)) is amended—

16 (1) in paragraph (5), by striking ‘‘; and’’ at the

17 end and inserting a period; and

18 (2) by striking paragraph (6).

19 SEC. 603. FLOOD INSURANCE PROGRAM ARRANGEMENTS

20 WITH PRIVATE INSURANCE ENTITIES.

21 Section 1345(b) of the National Flood Insurance Act

22 of 1968 (42 U.S.C. 4081(b)) is amended by striking the pe23 riod at the end and inserting the following: ‘‘and without

24 regard to the provisions of the Federal Advisory Committee

25 Act (5 U.S.C. App.).’’.
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1 SEC. 604. UPDATING OF FLOOD MAPS AND ASSESSMENT

2 AND MAPPING OF EROSION HAZARD ZONES.

3 Section 1360 of the National Flood Insurance Act of

4 1968 (42 U.S.C. 4101) is amended by adding at the end

5 the following new subsections:

6 ‘‘(e) REVIEW OF FLOOD MAPS.—Once during each 5-

7 year period (the 1st such period beginning on the date of

8 the enactment of the National Flood Insurance Reform Act

9 of 1994) or more often as the Director determines necessary

10 because of storm-induced erosion, increased watershed devel11 opment, or other extraordinary situations, the Director

12 shall assess the need to revise and update all floodplain

13 areas and flood risk zones identified, delineated, or estab14 lished under this section.

15 ‘‘(f) UPDATING FLOOD MAPS.—The Director shall re16 vise and update any floodplain areas and flood-risk zones—

17 ‘‘(1) upon the determination of the Director, ac18 cording to the assessment under subsection (e), that

19 revision and updating are necessary for the areas and

20 zones; or

21 ‘‘(2) upon the request from any State or local

22 government stating that specific floodplain areas or

23 flood-risk zones in the State or locality need revision

24 or updating, if sufficient technical data justifying the

25 request is submitted and the unit of government mak26 ing the request agrees to provide funds in an amount
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1 equal to the amount of funds provided by the Director

2 (or the equivalent value of data, technical analysis, or

3 other in-kind services) for the requested revision or

4 update.

5 ‘‘(g) AVAILABILITY OF FLOOD MAPS.—To promote

6 compliance with the requirements of this title, the Director

7 shall make flood insurance rate maps and related informa8 tion available free of charge to State agencies directly re9 sponsible for coordinating the national flood insurance pro10 gram and to appropriate representatives of communities

11 participating in the national flood insurance program, and

12 at a reasonable cost to all other persons. Any receipts result13 ing from this subsection shall be deposited in the National

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

15 ‘‘(h) NOTIFICATION OF FLOOD MAP CHANGES.—The

16 Director shall cause notice to be published in the Federal

17 Register (or shall provide notice by another comparable

18 method) of any change to flood insurance map panels and

19 any change to flood insurance map panels issued in the

20 form of a letter of map amendment or a letter of map revi21 sion. Such notice shall be published or otherwise provided

22 not later than 30 days after the map change or revision

23 becomes effective. Notice by any method other than publica24 tion in the Federal Register shall include all pertinent in25 formation, provide for regular and frequent distribution,
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1 and be at least as accessible to map users as notice in the

2 Federal Register. All notices under this subsection shall in3 clude information on how to obtain copies of the changes

4 or revisions.

5 ‘‘(i) COMPENDIA OF FLOOD MAP CHANGES.—Every 6

6 months, the Director shall publish separately in their en7 tirety within a compendium, all changes and revisions to

8 flood insurance map panels and all letters of map amend9 ment and letters of map revision for which notice was pub10 lished in the Federal Register or otherwise provided during

11 the preceding 6 months. The Director shall make such com12 pendia available, free of charge, to States and communities

13 participating in the national flood insurance program pur14 suant to section 1310 and at cost to all other parties. Any

15 receipts resulting from this subsection shall be deposited in

16 the National Flood Insurance Fund, pursuant to section

17 1310(b)(6).

18 ‘‘(j) ESTABLISHMENT OF EROSION HAZARD ZONES.—

19 ‘‘(1) IN GENERAL.—Not later than the expiration

20 of the 6-year period beginning on the date of the en21 actment of the National Flood Insurance Reform Act

22 of 1994, the Director shall assess, identify, and map

23 all coastal areas that have special erosion hazards (in

24 this section referred to as ‘erosion hazard zones’), as

25 provided in this subsection.
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1 ‘‘(2) MAPPING PRIORITIES.—Not later than 2

2 years after the date of enactment of the National

3 Flood Insurance Reform Act of 1994, the Director

4 shall determine the coastal areas that are at greatest

5 risk from erosion and assess, identify, and map the

6 erosion hazard zones in such areas.

7 ‘‘(3) 60-YEAR EROSION ZONES.—On each flood

8 insurance rate map established under this section, the

9 Director shall identify and provide legible demarca10 tion for areas that are subject to special erosion haz11 ards within a 60-year period based on past annual

12 average rates of shoreline retreat in such areas (in

13 this section referred to as ‘60-year erosion zones’).

14 ‘‘(4) 30-YEAR EROSION ZONES.—On each flood

15 insurance rate map established under this section, the

16 Director shall provide information by area regarding

17 the existing annual average rate of erosion for each

18 area, so that users of the maps can delineate bound19 aries for areas subject to erosion within 30 years (in

20 this section referred to as ‘30-year erosion zones’).

21 ‘‘(5) CONSIDERATION OF MITIGATION ACTIVI22 TIES.—In identifying and mapping erosion hazard

23 zones, the Director shall determine erosion rates based

24 on (A) the presence of any community erosion control

25 measures, and (B) erosion of the area in the absence
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1 of such measures. The Director shall use the lower of

2 the estimated erosion rates in the determination of the

3 erosion hazard zones.

4 ‘‘(6) USE OF STATE AND COMMUNITY INFORMA5 TION.—In designating erosion hazard zones under

6 this title, the Director shall, to the maximum extent

7 practicable, use State or community erosion rate data

8 and baseline reference features.

9 ‘‘(7) REVIEW.—The Director shall consult with

10 State and community governments in the determina11 tion of erosion hazard zones, and shall provide for a

12 public review and appeals process comparable to the

13 established review and appeals process for flood ele14 vation determinations required under this title.

15 ‘‘(8) UPDATING.—The Director shall provide for

16 revising and updating erosion hazard zones as fre17 quently as the Director determines to be necessary for

18 purposes of this title. In revising the geographical

19 boundaries of erosion hazard zones, the Director shall

20 place special emphasis on considering—

21 ‘‘(A) areas (or subdivisions thereof) that are

22 experiencing or have recently experienced erosion

23 rates in excess of the annual average erosion

24 rate, due to storms, high lake levels, or other fac25 tors; and
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1 ‘‘(B) areas where nonstructural and struc2 tural measures have been implemented by a com3 munity to control erosion or erosion rates have

4 been otherwise significantly altered by manmade

5 or induced activity.

6 ‘‘(9) TRANSITION.—Until the Director has as7 sessed, identified, and mapped erosion rate data for

8 a community, the community may obtain, review,

9 and reasonably use erosion rate information or other

10 historical data available from other Federal, State, or

11 other sources in order to develop a mitigation plan

12 required for assistance under section 1366.’’.

13 SEC. 605. STUDY OF ECONOMIC EFFECTS OF CHARGING AC14 TUARIALLY-BASED PREMIUM RATES FOR PRE15 FIRM STRUCTURES.

16 (a) STUDY.—The Director of the Federal Emergency

17 Management Agency (in this section referred to as the ‘‘Di18 rector’’) shall conduct a study of the economic effects that

19 would result from increasing premium rates for flood insur20 ance coverage made available under the national flood in21 surance program for pre-FIRM structures to the full actuar22 ial risk based premium rate determined under section

23 1307(a)(1) of the National Flood Insurance Act of 1968 for

24 the area in which the property is located. In conducting

25 the study, the Director shall—
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1 (1) determine each area that would be subject to

2 such increased premium rates; and

3 (2) for each such area, determine—

4 (A) the amount by which premium rates

5 would be increased;

6 (B) the number and types of properties af7 fected and the number and types of properties

8 covered by flood insurance under this title likely

9 to cancel such insurance if the rate increases

10 were made;

11 (C) the effects that the increased premium

12 rates would have on land values and property

13 taxes; and

14 (D) any other effects that the increased pre15 mium rates would have on the economy and

16 homeowners.

17 (b) DEFINITION OF ‘‘PRE-FIRM STRUCTURE’’.—For

18 purposes of subsection (a), the term ‘‘pre-FIRM structure’’

19 means a structure that was not constructed or substantially

20 improved after the later of—

21 (1) December 31, 1974; or

22 (2) the effective date of the initial rate map pub23 lished by the Director under section 1360(a)(2) of the

24 National Flood Insurance Act of 1968 for the area in

25 which such structure is located.
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1 (c) REPORT.—The Director shall submit a report to

2 the Congress describing and explaining the findings of the

3 study conducted under this section. The report shall be sub4 mitted not later than 12 months after the date of the enact5 ment of this Act.

6 SEC. 606. NATIONAL FLOOD INSURANCE FUND.

7 (a) AVAILABILITY OF FUND FOR INCREASED ADMINIS8 TRATIVE AND OPERATIONAL RESPONSIBILITIES.—Section

9 1310(a) of the National Flood Insurance Act of 1968 (42

10 U.S.C. 4017(a)) is amended—

11 (1) in the matter preceding paragraph (1), by

12 inserting ‘‘(except as otherwise provided in this sec13 tion)’’ after ‘‘without fiscal year limitation’’; and

14 (2) by inserting after paragraph (5) (as added

15 by the preceding provisions of this Act) the following

16 new paragraphs:

17 ‘‘(6) for assessment and mapping of erosion haz18 ard zones under section 1360(j), except that the fund

19 shall be available for the purpose under this para20 graph in an amount not to exceed an aggregate of

21 $25,000,000 over the 6-year period beginning on the

22 date of the enactment of the National Flood Insurance

23 Reform Act of 1994;

24 ‘‘(7) for the revision and updating of erosion

25 hazard zones under section 1360(j)(8), except that the
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1 fund shall be available for the purpose under this

2 paragraph in an amount not to exceed $2,000,000 in

3 each fiscal year beginning after the expiration of the

4 6-year period beginning on the date of the enactment

5 of the National Flood Insurance Reform Act of 1994;

6 and’’.

7 (b) SEPARATE ACCOUNT.—Section 1310(a) of the Na8 tional Flood Insurance Act of 1968 (42 U.S.C. 4017(a)) is

9 amended—

10 (1) by striking ‘‘is authorized to’’ and inserting

11 ‘‘shall’’; and

12 (2) by inserting after ‘‘which shall be’’ the follow13 ing: ‘‘an account separate from any other accounts or

14 funds available to the Director and shall be’’.

15 SEC. 607. EFFECTIVE DATES OF POLICIES.

16 (a) 30-DAY DELAY.—Section 1306 of the National

17 Flood Insurance Act of 1968 (42 U.S.C. 4013), as amended

18 by the preceding provisions of this Act, is further amended

19 by adding at the end the following new subsection:

20 ‘‘(c)(1) Except as provided in paragraph (2), coverage

21 under a new contract for flood insurance coverage under

22 this title entered into after the date of the enactment of the

23 National Flood Insurance Reform Act of 1994, and any

24 modification to coverage under an existing flood insurance

25 contract made after such date, shall become effective upon
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1 the expiration of the 30-day period beginning on the date

2 that all obligations for such coverage (including completion

3 of the application and payment of any initial premiums

4 owed) are satisfactorily completed.

5 ‘‘(2) Coverage under a flood insurance contract for

6 newly constructed property and coverage for newly acquired

7 property, that is obtained before or upon the completion of

8 the construction or transfer of title to the property, as appli9 cable, shall become effective at such time as the Director

10 shall by regulation provide.’’.

11 (b) STUDY.—The Director of the Federal Emergency

12 Management Agency shall conduct a study to determine the

13 appropriateness of existing requirements regarding the ef14 fective date and time of coverage under flood insurance con15 tracts obtained through the national flood insurance pro16 gram. In conducting the study, the Director shall determine

17 whether any delay between the time of purchase of flood

18 insurance coverage and the time of initial effectiveness of

19 the coverage should differ for various classes of properties

20 (based upon the type of property, location of the property,

21 or any other factors related to the property) or for various

22 circumstances under which such insurance was purchased.

23 Not later than the expiration of the 6-month period begin24 ning on the date of the enactment of this Act, the Director
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1 shall submit to the Congress a report on the results of the

2 study.

3 SEC. 608. REGULATIONS.

4 The Director of the Federal Emergency Management

5 Agency, the Secretary of Housing and Urban Development,

6 and any appropriate head of any Federal agency may each

7 issue any regulations necessary to carry out the applicable

8 provisions of this Act and the applicable amendments made

9 by this Act.

10 SEC. 609. RELATION TO STATE AND LOCAL LAWS.

11 This Act and the amendments made by this Act may

12 not be construed to preempt, annul, alter, amend, or exempt

13 any person from compliance with any law, ordinance, or

14 regulation of any State or local government with respect

15 to land use, management, or control.

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