I

103D CONGRESS

2D SESSION H. R. 4125

To improve the national flood insurance program to increase the stability

of the National Flood Insurance Fund through improved risk management, enhanced compliance, and incentives for mitigation, and for other

purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 24, 1994

Mr. HUGHES (for himself and Mr. SAXTON) introduced the following bill;

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

A BILL

To improve the national flood insurance program to increase

the stability of the National Flood Insurance Fund

through improved risk management, enhanced compliance, and incentives for mitigation, and for other

purposes.

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

5 ‘‘Flood Insurance Risk Management Act of 1994’’.

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title and table of contents.

Sec. 2. Definitions.
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TITLE I—COMPLIANCE AND INCREASED PARTICIPATION

Sec. 101. Existing flood insurance purchase requirements.

Sec. 102. Expanded flood insurance purchase requirements.

Sec. 103. Escrow of flood insurance payments.

Sec. 104. Placement of flood insurance by lenders.

Sec. 105. Penalties for failure to require flood insurance or notify.

Sec. 106. Ongoing compliance with flood insurance purchase requirements.

Sec. 107. Fees for determining applicability of flood insurance purchase requirements.

Sec. 108. Notice requirements.

Sec. 109. Standard hazard determination forms.

Sec. 110. Examinations regarding compliance.

Sec. 111. Financial Institutions Examination Council.

Sec. 112. Clerical amendments.

TITLE II—FLOOD INSURANCE PREMIUM RATES AND COVERAGE

AMOUNTS

Sec. 201. Preference for charging actuarial rates.

Sec. 202. Community rating system and incentives for flood damage mitigation

measures.

Sec. 203. Community premium-pooling program.

Sec. 204. Maximum flood insurance coverage amounts.

Sec. 205. Study of economic effects of charging actuarially-based premium

rates for pre-firm structures.

Sec. 206. GAO study of economic impact of erosion hazard areas.

TITLE III—REVOLVING LOAN FUND FOR FLOOD AND EROSION

DAMAGE MITIGATION ACTIVITIES AND ADDITIONAL MITIGATION COVERAGE

Sec. 301. Flood and Erosion Risk Management Fund.

Sec. 302. Flood insurance premium surcharges.

Sec. 303. Additional coverage for mitigation activities.

TITLE IV—MISCELLANEOUS PROVISIONS

Sec. 401. Extension of flood insurance program.

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

Sec. 403. Limitations on claims for repetitively damaged structures.

Sec. 404. Penalties for repetitive claims.

Sec. 405. Flood insurance program arrangements with private insurance entities.

Sec. 406. Authorization of appropriations.

1 SEC. 2. DEFINITIONS.

2 (a) FLOOD DISASTER PROTECTION ACT OF 1973.—

3 Section 3(a) of the Flood Disaster Protection Act of 1973

4 (42 U.S.C. 4003(a)) is amended—
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1 (1) by striking paragraph (5) and inserting the

2 following new paragraph:

3 ‘‘(5) ‘Federal entity for lending regulation’

4 means the Board of Governors of the Federal Re5 serve System, the Federal Deposit Insurance Cor6 poration, the Comptroller of the Currency, the Office

7 of Thrift Supervision, and the National Credit

8 Union Administration, and with respect to a particu9 lar regulated lending institution means the entity

10 primarily responsible for the supervision, approval,

11 or regulation of the institution;’’;

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

13 the end and inserting a semicolon; and

14 (3) by inserting after paragraph (6) the follow15 ing new paragraphs:

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

17 agency that makes direct loans secured by improved

18 real estate or a mobile home, to the extent such

19 agency acts in such capacity;

20 ‘‘(8) ‘lender’ includes any regulated lending in21 stitution, other lending institution, and Federal

22 agency lender, but does not include any agency en23 gaged primarily in the purchase of mortgage loans;

24 ‘‘(9) ‘other lending institution’ means any lend25 ing institution that is not subject to the supervision,
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1 approval, regulation, or insuring of any Federal en2 tity for lending regulation and that is not a Federal

3 agency lender, but does not include institutions en4 gaged primarily in the purchase of mortgage loans;

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

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

7 similar institution subject to the supervision, ap8 proval, regulation, or insuring of a Federal entity for

9 lending regulation; and

10 ‘‘(11) ‘servicer’ means the person responsible

11 for receiving any scheduled periodic payments from

12 a borrower pursuant to the terms of a loan, includ13 ing amounts for taxes, insurance premiums, and

14 other charges with respect to the property, and mak15 ing the payments of principal and interest and such

16 other payments with respect to the amounts received

17 from the borrower as may be required pursuant to

18 the terms of the loan.’’.

19 (b) NATIONAL FLOOD INSURANCE ACT OF 1968.—

20 Section 1370(a) of the National Flood Insurance Act of

21 1968 (42 U.S.C. 4121(a)) is amended—

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

23 end;

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

25 the end and inserting a semicolon; and
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1 (3) by inserting after paragraph (6) the follow2 ing new paragraphs:

3 ‘‘(7) the term ‘coastal’ means relating to the

4 coastlines and bays of the tidal waters of the United

5 States or the shorelines of the Great Lakes, but does

6 not refer to bayous, riverine areas, and riverine por7 tions of estuaries;

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

9 Federal agency that makes direct loans secured by

10 improved real estate or a mobile home, to the extent

11 such agency acts in such capacity;

12 ‘‘(9) the term ‘Federal entity for lending regu13 lation’ means the Board of Governors of the Federal

14 Reserve System, the Federal Deposit Insurance Cor15 poration, the Comptroller of the Currency, the Office

16 of Thrift Supervision, and the National Credit

17 Union Administration, and with respect to a particu18 lar regulated lending institution means the entity

19 primarily responsible for the supervision, approval,

20 or regulation of the institution;

21 ‘‘(10) the term ‘lender’ includes any regulated

22 lending institution, other lending institution, and

23 Federal agency lender, but does not include any

24 agency engaged primarily in the purchase of mort25 gage loans;
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1 ‘‘(11) the term ‘natural and beneficial flood2 plain functions’ means (A) the functions associated

3 with the natural or relatively undisturbed floodplain

4 that moderate flooding, retain flood waters, reduce

5 erosion and sedimentation, and mitigate the effect of

6 waves and storm surge from storms;

7 ‘‘(12) the term ‘regulated lending institution’

8 means a bank, savings and loan association, credit

9 union, or similar institution subject to the super10 vision, approval, regulation, or insuring of a Federal

11 entity for lending regulation;

12 ‘‘(13) the term ‘other lending institution’ means

13 any lending institution that is not subject to the su14 pervision, approval, regulation, or insuring of any

15 Federal entity for lending regulation and that is not

16 a Federal agency lender, but does not include insti17 tutions engaged primarily in the purchase of mort18 gage loans; and

19 ‘‘(14) the term ‘servicer’ means the person re20 sponsible for receiving any scheduled periodic pay21 ments from a borrower pursuant to the terms of a

22 loan, including amounts for taxes, insurance pre23 miums, and other charges with respect to the prop24 erty, and making the payments of principal and in25 terest and such other payments with respect to the
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1 amounts received from the borrower as may be re2 quired pursuant to the terms of the loan.’’.

3 (c) CONFORMING AMENDMENTS.—

4 (1) FLOOD DISASTER PROTECTION ACT OF

5 1973.—Section 202(b) of the Flood Disaster Protec6 tion Act of 1973 (42 U.S.C. 4106(b)) is amended by

7 striking ‘‘Federal instrumentality described in such

8 section shall by regulation require the institutions’’

9 and inserting ‘‘Federal entity for lending regulation

10 (with respect to regulated lending institutions), the

11 Secretary of Housing and Urban Development (with

12 respect to other lending institutions), and the appro13 priate head of each Federal agency lender, shall by

14 regulation require the lenders’’.

15 (2) NATIONAL FLOOD INSURANCE ACT OF

16 1968.—Section 1322(d) of the National Flood Insur17 ance Act of 1968 (42 U.S.C. 4029(d)) is amended

18 by striking ‘‘federally supervised, approved, regu19 lated or insured financial institution’’ and inserting

20 ‘‘regulated lending institution, other lending institu21 tion, or Federal agency lender’’.
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1 TITLE I—COMPLIANCE AND

2 INCREASED PARTICIPATION

3 SEC. 101. EXISTING FLOOD INSURANCE PURCHASE RE4 QUIREMENTS.

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

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

7 (1) by inserting after ‘‘(a)’’ the following: ‘‘RE8 QUIREMENT FOR FEDERAL ASSISTANCE FOR ACQUI9 SITION OR CONSTRUCTION.—’’; and

10 (2) by adding at the end the following new sen11 tence: ‘‘This subsection may not be construed to per12 mit the provision of any amount of financial assist13 ance with respect to any building or mobile home

14 and related personal property for which flood insur15 ance is required under this subsection, unless the re16 quirements under this subsection are complied with

17 in full. The prohibitions and requirements of this

18 subsection relating to financial assistance may not

19 be waived for any purpose.’’.

20 SEC. 102. EXPANDED FLOOD INSURANCE PURCHASE RE21 QUIREMENTS.

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

23 of 1973 (42 U.S.C. 4012a(b)) is amended to read as fol24 lows:

25 ‘‘(b) REQUIREMENT FOR MORTGAGE LOANS.—
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1 ‘‘(1) REGULATED LENDING INSTITUTIONS.—

2 Each Federal entity for lending regulation (after

3 consultation and coordination with the Financial In4 stitutions Examination Council established under the

5 Federal Financial Institutions Examination Council

6 Act of 1974) shall by regulation direct regulated

7 lending institutions not to make, increase, extend, or

8 renew, after the expiration of 60 days following the

9 date of the enactment of this Act, any loan secured

10 by improved real estate or a mobile home located or

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

12 the Director as an area having special flood hazards

13 and in which flood insurance has been made avail14 able under the National Flood Insurance Act of

15 1968, unless the building or mobile home and any

16 personal property securing such loan is covered for

17 the term of the loan by flood insurance in an

18 amount at least equal to the outstanding principal

19 balance of the loan or the maximum limit of cov20 erage made available under the Act with respect to

21 the particular type of property, whichever is less.

22 ‘‘(2) OTHER LENDING INSTITUTIONS.—The

23 Secretary of Housing and Urban Development (after

24 consultation and coordination with the Financial In-
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1 stitutions Examination Council) shall by regulation

2 direct that—

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

4 make, increase, extend, or renew any loan se5 cured by improved real estate consisting of a 1-

6 to 4-family residence or a mobile home located

7 or to be located in an area that has been identi8 fied by the Director of the Federal Emergency

9 Management Agency as an area having special

10 flood hazards and in which flood insurance has

11 been made available under the National Flood

12 Insurance Act of 1968, unless the building or

13 mobile home and any personal property secur14 ing such loan is covered for the term of the loan

15 by flood insurance in the amount provided in

16 paragraph (1); and

17 ‘‘(B) any loan that is—

18 ‘‘(i) secured by improved real estate

19 or a mobile home located in an area that

20 has been identified at the time of the origi21 nation of the loan by the Director of the

22 Federal Emergency Management Agency,

23 as an area of special flood hazards and in

24 which flood insurance is available under
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1 the National Flood Insurance Act of 1968,

2 and

3 ‘‘(ii) purchased by the Government

4 National Mortgage Association,

5 is covered for the term of the loan by flood in6 surance in the amount provided in paragraph

7 (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

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

12 that has been identified by the Director of the Fed13 eral Emergency Management Agency as an area

14 having special flood hazards and in which flood in15 surance has been made available under the National

16 Flood Insurance Act of 1968, unless the building or

17 mobile home and any personal property securing

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

19 insurance in the amount provided in paragraph (1).

20 The relevant head of each Federal agency lender

21 shall issue any regulations necessary to carry out

22 this paragraph. Such regulations shall be consistent

23 with and substantially identical to the regulations is24 sued under paragraphs (1) and (2).
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1 ‘‘(4) GOVERNMENT-SPONSORED ENTERPRISES

2 FOR HOUSING.—The Federal National Mortgage As3 sociation and the Federal Home Loan Mortgage

4 Corporation shall implement procedures reasonably

5 designed 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 insur15 ance 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 deter22 mined by the Director, submitted to the lender by

23 the borrower.

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

2 of the 1-year period beginning on the date of the en3 actment of the Flood Insurance Risk Management

4 Act of 1994.’’.

5 SEC. 103. 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 lend12 ing regulation (with respect to any loans of regu13 lated lending institutions) and the Secretary of

14 Housing and Urban Development (with respect to

15 any loans of other lending institutions), after con16 sultation and coordination with the Financial Insti17 tutions Examination Council, shall by regulation re18 quire that, if a lender or other servicer of the loan

19 requires the escrowing of taxes, insurance premiums,

20 fees, or any other charges for a loan secured by resi21 dential real estate or a mobile home, then all pre22 miums and fees for flood insurance under the Na23 tional Flood Insurance Act of 1968 for the residen24 tial real estate or mobile home shall be paid to the

25 lender or servicer of the loan. Premiums and fees
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1 paid to the lender or servicer shall be paid in a man2 ner sufficient to make payments as due for the dura3 tion of the loan. Upon receipt of the premiums, the

4 lender or servicer of the loan shall deposit the pre5 miums in an escrow account on behalf of the bor6 rower. Upon receipt of a notice from the Director or

7 the provider of the insurance that insurance pre8 miums are due, the lender or servicer shall pay from

9 the escrow account to the provider of the insurance

10 the amount of insurance premiums 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 re15 lating 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

20 regulations issued under paragraph (1).

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

23 be subject to the provisions of section 10 of the Real

24 Estate 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-

4 year period beginning on the date of the enactment

5 of the Flood Insurance Risk Management Act of

6 1994.’’.

7 SEC. 104. PLACEMENT OF FLOOD INSURANCE BY LENDERS.

8 (a) ACTIONS REQUIRED BY LENDER.—Section 102

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

10 4012a), as amended by the preceding provisions of this

11 Act, is further amended by adding at the end the following

12 new subsection:

13 ‘‘(e) PLACEMENT OF FLOOD INSURANCE BY LEND14 ER.—

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

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

17 loan secured by improved real estate or by a mobile

18 home located in an area that has been identified by

19 the Director as an area having special flood hazards

20 and in which flood insurance is available under the

21 National Flood Insurance Act of 1968, the lender or

22 servicer for the loan determines that the building or

23 mobile home and any personal property securing the

24 loan is covered by flood insurance in an amount less

25 than the amount required for the property pursuant
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1 to subsection (b), the lender or servicer shall notify

2 the borrower under the loan that the borrower

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

4 of flood insurance for the property that is not less

5 than the amount under subsection (b)(1), for the

6 term of the loan.

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

8 BORROWER.—If the borrower fails to purchase such

9 flood insurance within 60 days after such notifica10 tion, the lender or servicer for the loan shall pur11 chase the insurance on behalf of the borrower and

12 may charge the borrower for the cost of premiums

13 and fees incurred by the lender or servicer for the

14 loan in purchasing the insurance.

15 ‘‘(3) REVIEW OF DETERMINATION REGARDING

16 REQUIRED PURCHASE.—

17 ‘‘(A) IN GENERAL.—A borrower may re18 quest that the Director review a determination

19 that the improved real estate or mobile home

20 securing the loan is located in an area of special

21 flood hazards. Not later than 45 days after the

22 Director receives the request, the Director shall

23 review the determination and provide the bor24 rower with a letter stating whether or not the
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1 property is in a special flood hazards area. The

2 determination of the Director shall be final.

3 ‘‘(B) EFFECT OF DETERMINATION.—Any

4 person to whom a borrower provides a letter is5 sued by the Director pursuant to subparagraph

6 (A), stating that the property of the borrower

7 is not in an area of special flood hazards, shall

8 have no obligation under this title to require the

9 purchase of flood insurance on the property

10 during the 1-year period beginning upon the

11 date that such letter is provided.

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

13 apply to all loans outstanding on or after the date

14 of enactment of the Flood Insurance Risk Manage15 ment Act of 1994.’’.

16 SEC. 105. PENALTIES FOR FAILURE TO REQUIRE FLOOD IN17 SURANCE OR NOTIFY.

18 (a) AUTHORITY.—Section 102 of the Flood Disaster

19 Protection Act of 1973 (42 U.S.C. 4012a), as amended

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

21 by adding at the end the following new subsections:

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

23 REQUIRE FLOOD INSURANCE OR NOTIFY.—

24 ‘‘(1) CIVIL MONETARY PENALTIES AGAINST

25 LENDERS.—Any regulated or other lending institu-
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1 tion that is found to have a pattern or practice of

2 committing violations under paragraph (2) shall be

3 assessed a civil penalty by the appropriate Federal

4 entity for lending regulation (with respect to regu5 lated lending institutions) or the Secretary of Hous6 ing and Urban Development (with respect to other

7 lending institutions) in the amount provided under

8 paragraph (5).

9 ‘‘(2) LENDER VIOLATIONS.—The violations re10 ferred to in paragraph (1) shall be—

11 ‘‘(A) making, increasing, extending, or re12 newing loans in violation of—

13 ‘‘(i) the regulations issued pursuant to

14 subsection (b) of this section;

15 ‘‘(ii) the escrow requirements under

16 subsection (d) of this section; or

17 ‘‘(iii) the notice requirements under

18 section 1364 of the National Flood Insur19 ance Act of 1968; or

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

21 flood insurance coverage in violation of sub22 section (e) of this section.

23 ‘‘(3) CIVIL MONETARY PENALTIES AGAINST

24 GSE’S.—If the Federal National Mortgage Associa25 tion or the Federal Home Loan Mortgage Corpora-
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1 tion is found by the Director of the Office of Federal

2 Housing Enterprise Oversight of the Department of

3 Housing and Urban Development to have a pattern

4 or practice of purchasing loans in violation of the

5 procedures established pursuant to subsection (b)(4)

6 of this section, the Director of such Office shall as7 sess a civil penalty against such enterprise in the

8 amount provided under paragraph (5) of this sub9 section. For purposes of this subsection, the term

10 ‘enterprise’ means the Federal National Mortgage

11 Association or the Federal Home Loan Mortgage

12 Corporation.

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

14 this subsection may be issued only after notice and

15 an opportunity for a hearing on the record.

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

17 this subsection may not exceed $350 for each viola18 tion under paragraph (2) or paragraph (3). The

19 total amount of penalties assessed under this sub20 section against any single regulated lending institu21 tion, other lending institution, or enterprise for any

22 calendar year may not exceed $100,000.

23 ‘‘(6) LENDER COMPLIANCE.—Notwithstanding

24 any State or local law, for purposes of this sub25 section, any lender that purchases flood insurance or
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1 renews a contract for flood insurance on behalf of or

2 as an agent of a borrower of a loan for which flood

3 insurance is required shall be considered to have

4 complied with the regulations issued under sub5 section (b).

6 ‘‘(7) EFFECT OF TRANSFER ON LIABILITY.—

7 Any sale or other transfer of a loan by a lender who

8 has committed a violation under paragraph (1), that

9 occurs subsequent to the violation, shall not affect

10 the liability of the transferring lender with respect to

11 any penalty under this subsection. A lender shall not

12 be liable for any violations relating to a loan com13 mitted by another lender who previously held the

14 loan.

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

16 collected under this subsection shall be paid into the

17 National Flood Insurance Fund established under

18 section 1310 of the National Flood Insurance Act of

19 1968.

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

21 under this subsection shall be in addition to any civil

22 remedy or criminal penalty otherwise available.

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

24 may be imposed under this subsection after the expi25 ration of the 5-year period beginning on the date of
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1 the occurrence of the violation for which the penalty

2 is authorized under this subsection.

3 ‘‘(g) OTHER ACTIONS TO REMEDY PATTERN OF

4 NONCOMPLIANCE.—

5 ‘‘(1) AUTHORITY OF FEDERAL ENTITIES FOR

6 LENDING REGULATION.—The head of the applicable

7 Federal entity for lending regulation may require a

8 regulated lending institution to take such remedial

9 actions as are necessary to ensure that the regulated

10 lending institution complies with the requirements of

11 the national flood insurance program if the Federal

12 agency for lending regulation makes a determination

13 under paragraph (3) regarding the regulated lending

14 institution.

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

16 Secretary of Housing and Urban Development may

17 require an other lending institution to take such re18 medial actions as are necessary to ensure that the

19 other lending institution complies with the require20 ments of the national flood insurance program if

21 such Secretary makes a determination under para22 graph (3) regarding the other lending institution.

23 ‘‘(3) DETERMINATION OF VIOLATIONS.—A de24 termination under this paragraph shall be a finding

25 that—
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1 ‘‘(A) the regulated lending institution or

2 other lending institution, as the case may be,

3 has engaged in a pattern and practice of non4 compliance in violation of the regulations issued

5 pursuant to subsection (b), (d), or (e) of this

6 section or the notice requirements under section

7 1364 of the National Flood Insurance Act of

8 1968; and

9 ‘‘(B) the regulated lending institution or

10 other lending institution, as the case may be,

11 has not demonstrated measurable improvement

12 in compliance despite the assessment of civil

13 monetary penalties under subsection (f).’’.

14 (b) DEPOSIT OF PENALTIES.—Section 1310(b) of the

15 National Flood Insurance Act of 1968 is amended—

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

17 end;

18 (2) by redesignating paragraph (6) as para19 graph (9); and

20 (3) by inserting after paragraph (5) the follow21 ing new paragraph:

22 ‘‘(6) any penalties collected under section

23 102(f) of the Flood Disaster Protection Act of

24 1973;’’.
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1 SEC. 106. ONGOING COMPLIANCE WITH FLOOD INSURANCE

2 PURCHASE REQUIREMENTS.

3 Section 102 of the Flood Disaster Protection Act of

4 1973 (42 U.S.C. 4012a), as amended by the preceding

5 provisions of this Act, is further amended by adding at

6 the end the following new subsection:

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

8 TRANSFEREE.—

9 ‘‘(1) IN GENERAL.—Except as provided in para10 graphs (2) through (5), before the sale or transfer

11 of any loan secured by improved real estate or a mo12 bile home, the seller or transferor of the loan shall

13 determine whether the property is in an area that

14 has been designated by the Director as an area hav15 ing special flood hazards. The seller or transferor

16 shall, before sale or transfer, notify the purchaser or

17 transferee and any servicer of the loan in writing re18 garding the results of the determination. A deter19 mination under this paragraph shall be evidenced

20 using the standard hazard determination form under

21 section 1365 of the National Flood Insurance Act of

22 1968.

23 ‘‘(2) EXCEPTIONS.—For any loan secured by

24 improved real estate or a mobile home, a determina25 tion and notice under paragraph (1) shall not be re-
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1 quired if, during the 5-year period ending on the

2 date of the sale or transfer of the loan—

3 ‘‘(A) a determination and notice under

4 paragraph (1) has been made for the property

5 secured by the loan; or

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

7 extended, or renewed; and

8 ‘‘(ii) the lender making, increasing, extend9 ing, or renewing the loan was subject, at the

10 time of such transaction, to regulations issued

11 pursuant to paragraph (1), (2), or (3) of sub12 section (b).

13 ‘‘(3) LOANS TRANSFERRED BY FDIC.—

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

15 subparagraph (C), for any loan secured by im16 proved real estate or a mobile home that is sold

17 or transferred by the Federal Deposit Insurance

18 Corporation acting in its corporate capacity or

19 in its capacity as conservator or receiver, the

20 purchaser or transferee of the loan shall deter21 mine whether the property is in an area that

22 has been designated by the Director as an area

23 having special flood hazards.

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

25 or transferee of a loan required to make a de-
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1 termination and notification under subpara2 graph (A) shall notify the Director and any

3 servicer of the loan of the results of the deter4 mination (using the standard hazard determina5 tion form under section 1365 of the National

6 Flood Insurance Act of 1968) before the expira7 tion of the 90-day period beginning on the later

8 of (i) the purchase or transfer of the loan, or

9 (ii) the expiration of any option that the pur10 chaser or transferee may have to transfer or

11 put the loan back to the Federal Deposit Insur12 ance Corporation.

13 ‘‘(C) EXCEPTIONS.—Such determination

14 and notice shall not be required for any loan—

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

16 under the control of the Federal Deposit

17 Insurance Corporation; or

18 ‘‘(ii) for which the purchaser or trans19 feree exercises any available option to

20 transfer or put the loan back to the Fed21 eral Deposit Insurance Corporation.

22 ‘‘(4) LOANS TRANSFERRED BY RTC.—

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

24 by improved real estate or a mobile home that

25 is sold or transferred by the Resolution Trust
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1 Corporation acting in its corporate capacity or

2 in its capacity as a conservator or receiver, the

3 purchaser or transferee of the loan shall deter4 mine whether the property is in an area that

5 has been designated by the Director as an area

6 having special flood hazards if—

7 ‘‘(i) the Resolution Trust Corporation

8 acquires the loan after the date of the ef9 fectiveness of this subsection and sells or

10 transfers the loan before the expiration of

11 the 12-month period beginning on such ef12 fective date; or

13 ‘‘(ii) the Corporation holds the loan

14 on the date of the effectiveness of this sub15 section and sells or transfers the loan be16 fore the expiration of the 6-month period

17 beginning on such effective date.

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

19 or transferee of a loan required to make a de20 termination and notification under subpara21 graph (A) shall notify the Director and any

22 servicer of the loan of the results of the deter23 mination (using the standard hazard determina24 tion form under section 1365 of the National

25 Flood Insurance Act of 1968) before the expira-
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1 tion of the 90-day period beginning upon the

2 purchase or transfer of the loan.

3 ‘‘(5) LOANS TRANSFERRED BY NCUA.—

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

5 subparagraph (C), for any loan secured by im6 proved real estate or a mobile home that is sold

7 or transferred by the National Credit Union

8 Administration acting in its corporate capacity

9 or in its capacity as a conservator or liquidating

10 agent, the purchaser or transferee of the loan

11 shall determine whether the property is in an

12 area that has been designated by the Director

13 as an area having special flood hazards.

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

15 or transferee of a loan required to make a de16 termination and notification under subpara17 graph (A) shall notify the Director and any

18 servicer of the loan of the results of the deter19 mination (using the standard hazard determina20 tion form under section 1365 of the National

21 Flood Insurance Act of 1968) before the expira22 tion of the 90-day period beginning upon the

23 purchase or transfer of the loan.

24 ‘‘(C) EXCEPTION.—Such determination

25 and notice shall not be required for any loan
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1 sold or transferred to an entity under the con2 trol of the National Credit Union Administra3 tion.

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

5 apply only with respect to any loan outstanding or

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

7 beginning on the date of the enactment of the Flood

8 Insurance Risk Management Act of 1994.’’.

9 SEC. 107. FEES FOR DETERMINING APPLICABILITY OF

10 FLOOD INSURANCE PURCHASE REQUIRE11 MENTS.

12 Section 102 of the Flood Disaster Protection Act of

13 1973 (42 U.S.C. 4012a) as amended by the preceding pro14 visions of this Act, is further amended by adding at the

15 end the following new subsection:

16 ‘‘(i) FEE FOR DETERMINING LOCATION.—Notwith17 standing any other Federal or State law, any lender for

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

19 (b) may charge a reasonable fee (as determined by the

20 Director) for the costs of determining whether the prop21 erty securing the loan is located in an area of special flood

22 hazards, but only in accordance with the following require23 ments:
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1 ‘‘(1) BORROWER FEE.—The borrower under

2 such a loan may be charged the fee, but only if the

3 determination is made pursuant to—

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

5 renewing of the loan that is initiated by the

6 borrower; or

7 ‘‘(B) a revision or updating of the flood8 plain areas and flood-risk zones established

9 under section 1360 that affects the area in

10 which the property securing the loan is located

11 or that, in the determination of the Director,

12 may reasonably be considered to require a de13 termination under this subsection.

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

15 purchaser or transferee of such a loan may be

16 charged the fee in the case of sale or transfer of the

17 loan.’’.

18 SEC. 108. NOTICE REQUIREMENTS.

19 Section 1364 of the National Flood Insurance Act of

20 1968 (42 U.S.C. 4104a) is amended to read as follows:

21 ‘‘NOTICE REQUIREMENTS

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

23 HAZARDS.—

24 ‘‘(1) REGULATED LENDING INSTITUTIONS.—

25 ‘‘(A) REQUIREMENT.—Each Federal entity

26 for lending regulation, after consultation and
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1 coordination with the Financial Institutions Ex2 amination Council, shall by regulation require

3 regulated lending institutions, as a condition of

4 making, increasing, extending, or renewing any

5 loan secured by improved real estate or a mo6 bile home located or to be located in an area

7 that has been identified by the Director under

8 this title or the Flood Disaster Protection Act

9 of 1973 as an area having special flood haz10 ards, to provide notice under this subsection of

11 such special flood hazards a reasonable period

12 in advance of the signing of the purchase agree13 ment, lease, or other documents involved in the

14 transaction.

15 ‘‘(B) MANNER.—The regulations under

16 this subsection shall require the lenders to pro17 vide the notice of such special flood hazards in

18 writing and orally to the purchaser or lessee of

19 the real estate or mobile home and in writing

20 to the servicer of the loan (or to obtain satisfac21 tory assurances that the seller or lessor has

22 provided such notice).

23 ‘‘(C) RECORD OF RECEIPT.—The regula24 tions under this subsection shall require the

25 lenders—
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1 ‘‘(i) to obtain signed statements by

2 the purchaser or lessee and the servicer

3 that the purchaser or lessee and servicer,

4 as applicable, have received the notices re5 quired under this subsection; and

6 ‘‘(ii) to retain such signed statements

7 and written records of the provision and

8 receipt of the notices required under this

9 subsection.

10 ‘‘(2) OTHER LENDING INSTITUTIONS.—The

11 Secretary of Housing and Urban Development shall

12 by regulation require notification in the manner pro13 vided under paragraph (1) with respect to any loan

14 made by an other lending institution and secured by

15 improved real estate consisting of a 1- to 4-family

16 residence or a mobile home located or to be located

17 in an area that has been identified by the Director

18 under this title or the Flood Disaster Protection Act

19 of 1973 as an area having special flood hazards. Any

20 regulations issued under this paragraph shall be con21 sistent with and substantially identical to the regula22 tions issued under paragraph (1) (except to the ex23 tent necessary to provide for differences between the

24 types of loans for which notice is required under this
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1 paragraph and the types for which notice is required

2 under paragraph (1)).

3 ‘‘(3) FEDERAL AGENCY LENDERS.—The appro4 priate head of each Federal agency lender shall by

5 regulation require notification in the manner pro6 vided under paragraph (1) with respect to any loan

7 that is made by the Federal agency lender and se8 cured by improved real estate or a mobile home lo9 cated or to be located in an area that has been iden10 tified by the Director under this title or the Flood

11 Disaster Protection Act of 1973 as an area having

12 special flood hazards. Any regulations issued under

13 this paragraph shall be consistent with and substan14 tially identical to the regulations issued under para15 graph (1) (except to the extent necessary to provide

16 for differences between the types of loans for which

17 notice is required under this paragraph and the

18 types for which notice is required under paragraph

19 (1)).

20 ‘‘(4) CONTENTS OF NOTICE.—Written and oral

21 notification required under this subsection shall in22 clude—

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

24 in consultation with and subject to the approval

25 of the Director, stating that the real estate or
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1 mobile home securing the loan is located or is

2 to be located in an area having special flood

3 hazards;

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

5 purchase requirements under section 102(b) of

6 the Flood Disaster Protection Act of 1973;

7 ‘‘(C) a statement that flood insurance cov8 erage may be purchased under the national

9 flood insurance program and is also available

10 from private insurers; and

11 ‘‘(D) any other information that the Direc12 tor considers necessary to carry out the pur13 poses of the national flood insurance program.

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

15 ‘‘(1) LENDING INSTITUTIONS.—Each Federal

16 entity for lending regulation (with respect to regu17 lated lending institutions) and the Secretary of

18 Housing and Urban Development (with respect to

19 other lending institutions), after consultation and co20 ordination with the Financial Institutions Examina21 tion Council, shall by regulation require such institu22 tions, as a condition of making, increasing, extend23 ing, renewing, selling, or transferring any loan de24 scribed in subsection (a)(1), to notify the Director

25 (or the designee of the Director) in writing during
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1 the term of the loan of the servicer of the loan. Such

2 institutions shall also notify the Director (or such

3 designee) of any change in the servicer of the loan,

4 not later than 60 days after the effective date of

5 such change. The regulations under this subsection

6 shall provide that upon any change in the servicing

7 of a loan, the duty to provide notification under this

8 subsection shall transfer to the transferee servicer of

9 the loan.

10 ‘‘(2) FEDERAL AGENCY LENDERS.—The appro11 priate head of each Federal agency lender shall by

12 regulation provide for notification in the manner

13 provided under paragraph (1) with respect to any

14 loan described in subsection (a)(1) that is made by

15 the Federal agency lender. Any regulations issued

16 under this paragraph shall be consistent with and

17 substantially identical to the regulations issued

18 under paragraph (1) of this subsection.

19 ‘‘(c) NOTIFICATION OF EXPIRATION OF INSUR20 ANCE.—The Director (or the designee of the Director)

21 shall, not less than 45 days before the expiration of any

22 contract for flood insurance under this title, issue notice

23 of such expiration by first class mail to the owner of the

24 property, the servicer of any loan secured by the property

25 covered by the contract, and the owner of the loan.’’.
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1 SEC. 109. STANDARD HAZARD DETERMINATION FORMS.

2 Chapter III of the National Flood Insurance Act of

3 1968 (42 U.S.C. 4101 et seq.) is amended by adding at

4 the end the following new section:

5 ‘‘STANDARD HAZARD DETERMINATION FORMS

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

7 consultation with representatives of the mortgage and

8 lending industry, the Federal entities for lending regula9 tion, the Federal agency lenders, and any other appro10 priate individuals, shall develop standard written and elec11 tronic forms for determining the flood hazard exposure of

12 a property for use in connection with loans secured by im13 proved real estate or a mobile home. The written and elec14 tronic forms shall be established by regulations issued not

15 later than 270 days after the date of the enactment of

16 the Flood Insurance Risk Management Act of 1994.

17 ‘‘(b) DESIGN AND CONTENTS.—

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

19 shall be designed to facilitate a determination of the

20 exposure to flood hazards of structures located on

21 the property to which the loan application relates.

22 The form shall be designed to facilitate compliance

23 with the provisions of this title.

24 ‘‘(2) CONTENTS.—The form shall require iden25 tification of the type of flood-risk zone in which the

26 property is located, the complete map and panel
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1 numbers for the property, and the date of the map

2 used for the determination, with respect to flood

3 hazard information on file with the Director. If the

4 property is not located in an area of special flood

5 hazards the form shall require a statement to such

6 effect and shall indicate the complete map and panel

7 numbers of the property. If the complete map and

8 panel numbers for the property are not available be9 cause the property is not located in a community

10 that is participating in the national flood insurance

11 program or because no map exists for the relevant

12 area, the form shall require a statement to such ef13 fect. The form shall provide for inclusion or attach14 ment of any relevant documents indicating revisions

15 or amendments to maps.

16 ‘‘(c) REQUIRED USE.—The Federal entities for lend17 ing regulation shall by regulation require the use of the

18 form under this section by regulated lending institutions.

19 The appropriate head of each Federal agency lender shall

20 by regulation provide for the use of the form with respect

21 to any loan made by such Federal agency lender. The Sec22 retary of Housing and Urban Development shall by regu23 lation require use of the form in connection with loans

24 purchased by Federal National Mortgage Association and

25 the Federal Home Loan Mortgage Corporation and the
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1 Government National Mortgage Association. The Sec2 retary of Housing and Urban Development shall encour3 age the use of the form by other lending institutions.

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

5 providing information regarding special flood hazards on

6 the form developed under this section (or otherwise re7 quired of a lender not required to use the form under this

8 section) any lender making, increasing, extending, or re9 newing a loan secured by improved real estate or a mobile

10 home may provide for the acquisition or determination of

11 such information to be made by a person other than such

12 institution, only to the extent such person guarantees the

13 accuracy of the information. The Director shall by regula14 tions establish requirements relating to the nature and

15 manner of such guarantees.

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

17 lending regulation, the Secretary of Housing and Urban

18 Development, and the appropriate head of each Federal

19 agency lender shall by regulation require any lender using

20 the electronic form developed under this section with re21 spect to any loan to make available upon the request of

22 such Federal entity, Secretary, or agency head, a written

23 form under this section for such loan within 48 hours after

24 such request.
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1 ‘‘(f) EFFECTIVE DATE.—The regulations under this

2 section requiring use of the written and electronic forms

3 established pursuant to this section shall be issued to4 gether with the regulations required under subsection (a)

5 and shall take effect upon the expiration of the 90-day

6 period beginning on such issuance.’’.

7 SEC. 110. EXAMINATIONS REGARDING COMPLIANCE.

8 (a) AMENDMENT TO FEDERAL DEPOSIT INSURANCE

9 ACT.—Section 10 of the Federal Deposit Insurance Act

10 (12 U.S.C. 1820) is amended by adding at the end the

11 following new subsection:

12 ‘‘(h) FLOOD INSURANCE COMPLIANCE BY INSURED

13 DEPOSITORY INSTITUTIONS.—

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

15 banking agency shall, during each scheduled on-site

16 examination required by this section, determine

17 whether the insured depository institution is comply18 ing with the requirements of the national flood in19 surance program.

20 ‘‘(2) REPORT.—

21 ‘‘(A) REQUIREMENT.—Not later than 1

22 year after the date of enactment of the Flood

23 Insurance Risk Management Act of 1994 and

24 biennially thereafter for the next 4 years, each

25 appropriate Federal banking agency shall sub-
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1 mit a report to the Congress on compliance by

2 insured depository institutions with the require3 ments of the national flood insurance program.

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

5 a description of the methods used to determine

6 compliance, the number of institutions exam7 ined during the reporting year, a listing and

8 total number of institutions found not to be in

9 compliance, actions taken to correct incidents of

10 noncompliance, and an analysis of compliance,

11 including a discussion of any trends, patterns,

12 and problems, and recommendations regarding

13 reasonable actions to improve the efficiency of

14 the examinations processes.’’.

15 (b) AMENDMENT TO FEDERAL CREDIT UNION

16 ACT.—Section 204 of the Federal Credit Union Act (12

17 U.S.C. 1784) is amended by adding at the end the follow18 ing new subsection:

19 ‘‘(e) FLOOD INSURANCE COMPLIANCE BY INSURED

20 CREDIT UNIONS.—

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

22 each examination conducted under this section, de23 termine whether the insured credit union is comply24 ing with the requirements of the national flood in25 surance program.
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1 ‘‘(2) REPORT.—

2 ‘‘(A) REQUIREMENT.—Not later than 1

3 year after the date of enactment of the Flood

4 Insurance Risk Management Act of 1994 and

5 biennially thereafter for the next 4 years, the

6 Board shall submit a report to Congress on

7 compliance by insured credit unions with the re8 quirements of the national flood insurance pro9 gram.

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

11 a description of the methods used to determine

12 compliance, the number of insured credit unions

13 examined during the reporting year, a listing

14 and total number of insured credit unions found

15 not to be in compliance, actions taken to correct

16 incidents of noncompliance, and an analysis of

17 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 (c) AMENDMENT TO FEDERAL HOUSING ENTER23 PRISES FINANCIAL SAFETY AND SOUNDNESS ACT OF

24 1992.—Section 1317 of the Federal Housing Enterprises

25 Financial Safety and Soundness Act of 1992 (12 U.S.C.
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1 4517) is amended by adding at the end the following new

2 subsection:

3 ‘‘(g) FLOOD INSURANCE COMPLIANCE BY ENTER4 PRISES.—

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

6 the report under section 110(d) of the Flood Insur7 ance Risk Management Act of 1994, the Director

8 shall, during each annual examination of an enter9 prise conducted under this section, determine wheth10 er the enterprise has established adequate proce11 dures required under section 102(b)(4) of the Flood

12 Disaster Protection Act of 1973 and is complying

13 with such procedures.

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

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

16 the Director—

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

18 under section 110(d) of the Flood Insurance

19 Risk Management Act of 1994, that the enter20 prise has established adequate procedures pur21 suant to section 102(b)(4) of the Flood Disas22 ter Protection Act of 1973 and has a pattern

23 of compliance with such procedures; and

24 ‘‘(B) certifies such finding in writing to

25 the Congress.
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1 ‘‘(3) REPORT.—

2 ‘‘(A) REQUIREMENT.—Not later than 1

3 year after the date of enactment of the Flood

4 Insurance Risk Management Act of 1994 and

5 biennially thereafter for the next 4 years, the

6 Director shall submit a report to Congress on

7 compliance by the enterprises with the proce8 dures established pursuant to section 102(b)(4)

9 of the Flood Disaster Protection Act of 1973.

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

11 a description of the methods used to determine

12 compliance, identification of any enterprise

13 found not to be in compliance, actions taken to

14 correct incidents of noncompliance, and an

15 analysis of compliance, including a discussion of

16 any trends, patterns, and problems, and rec17 ommendations regarding reasonable actions to

18 improve the efficiency of the examinations proc19 esses.’’.

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

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

22 the Comptroller General of the United States shall submit

23 a report to the Congress and the Director of the Office

24 of Federal Housing Enterprise Oversight of the Depart25 ment of Housing and Urban Development regarding the
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1 procedures established by the Federal National Mortgage

2 Association and the Federal Home Loan Mortgage Cor3 poration pursuant to section 102(b)(4) of the Flood Disas4 ter Protection Act of 1973. The report shall include a de5 scription of such procedures, an analysis of whether such

6 procedures are sufficient to comply with the requirements

7 of such section, a determination of whether each enter8 prise has complied with such procedures, a description of

9 any actions taken by each enterprise to correct any inci10 dents of noncompliance, and any recommendations regard11 ing reasonable actions to improve the procedures estab12 lished by the enterprises and compliance with such proce13 dures.

14 SEC. 111. FINANCIAL INSTITUTIONS EXAMINATION COUN15 CIL.

16 Section 1006 of the Federal Financial Institutions

17 Examination Council Act of 1978 (12 U.S.C. 3305) is

18 amended by adding at the end the following new sub19 section:

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

21 entities for lending regulation and the Secretary of Hous22 ing and Urban Development in developing and coordinat23 ing uniform standards and requirements for use by lenders

24 as provided under the National Flood Insurance Act of

25 1968 and the Flood Disaster Protection Act of 1973.’’.
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1 SEC. 112. 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 insert5 ing 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 II—FLOOD INSURANCE

12 PREMIUM RATES AND COV13 ERAGE AMOUNTS

14 SEC. 201. PREFERENCE FOR CHARGING ACTUARIAL RATES.

15 Section 1308(b) of the National Flood Insurance Act

16 of 1968 (42 U.S.C. 4015(b)) is amended—

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

18 striking ‘‘shall, insofar as practicable, be’’;

19 (2) in each of paragraphs (1), (3), and (4), by

20 inserting ‘‘shall, insofar as practicable, be’’ after the

21 paragraph designation; and

22 (3) by striking paragraph (2) and inserting the

23 following new paragraph:

24 ‘‘(2) shall be adequate, on the basis of accepted

25 actuarial principles, to provide reserves for antici-
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1 pated losses, except that such rates may be less than

2 such amount only if—

3 ‘‘(A) the rates are necessary to carry out—

4 ‘‘(i) the objective of making flood in5 surance available where necessary at rea6 sonable rates to encourage prospective

7 insureds to purchase such insurance, and

8 ‘‘(ii) the purposes of this title, and

9 ‘‘(B) with respect to rates in effect at any

10 time after the expiration of the 1-year period

11 beginning on the date of the enactment of the

12 Flood Insurance Risk Management Act of

13 1994.

14 ‘‘(i) the Director has certified to the

15 President and the Congress that, during a

16 specified period that does not exceed 2

17 years and begins on or after the date of

18 such certification, such rates are necessary

19 to carry out the objective referred to in

20 subparagraph (A)(i), and

21 ‘‘(ii) the period referred to in the cer22 tification has not expired,’’.
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1 SEC. 202. COMMUNITY RATING SYSTEM AND INCENTIVES

2 FOR FLOOD DAMAGE MITIGATION MEAS3 URES.

4 (a) IN GENERAL.—Section 1315 of the National

5 Flood Insurance Act of 1968 (42 U.S.C. 4022) is amend6 ed—

7 (1) by inserting after ‘‘SEC. 1315.’’ the follow8 ing: ‘‘(a) REQUIREMENT FOR PARTICIPATION IN

9 FLOOD INSURANCE PROGRAM.—’’; and

10 (2) by adding at the end the following new sub11 section:

12 ‘‘(b) COMMUNITY RATING SYSTEM AND INCENTIVES

13 FOR FLOOD DAMAGE MITIGATION MEASURES.—

14 ‘‘(1) AUTHORITY AND GOALS.—The Director

15 shall carry out a program under this subsection es16 tablishing a community rating system and providing

17 incentives for community floodplain management

18 and flood damage mitigation measures. The program

19 shall evaluate—

20 ‘‘(A) measures adopted by areas (and sub21 divisions thereof) in which the Director has

22 made flood insurance coverage available—

23 ‘‘(i) to provide for adequate land use

24 and control provisions consistent with the

25 comprehensive criteria for such land man26 agement and use under section 1361;
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1 ‘‘(ii) to facilitate accurate risk-rating;

2 ‘‘(iii) to promote flood insurance

3 awareness;

4 ‘‘(iv) to complement adoption of more

5 effective measures for floodplain and coast6 al erosion management; and

7 ‘‘(v) to reduce the risk of flood dam8 age to properties within such area; and

9 ‘‘(B) flood damage mitigation measures

10 taken by owners of properties for which such

11 coverage is provided.

12 ‘‘(2) INCENTIVES.—The program under this

13 subsection shall provide incentives in the form of ad14 justments in the premium rates for flood insurance

15 coverage as follows:

16 ‘‘(A) AREA-WIDE ADJUSTMENT FOR ADOP17 TION OF GOALS OR MITIGATION MEASURES.—

18 For any area that the Director determines has

19 adopted and enforced the goals of the commu20 nity rating system under this subsection on an

21 area-wide basis or completed flood damage miti22 gation or erosion control measures that reduce

23 the risk of flood damage to properties within

24 such area to the extent established by the Di25 rector, the Director shall adjust such premium
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1 rates for flood insurance coverage for properties

2 located in such area.

3 ‘‘(B) AREA-WIDE ADJUSTMENT FOR PRO4 TECTION OF FLOODPLAIN FUNCTIONS.—For

5 any area that the Director determines has im6 plemented measures relating to the protection

7 of natural and beneficial floodplain functions,

8 the Director may provide for additional adjust9 ments in such premium rates for properties lo10 cated in such area.

11 ‘‘(C) AREA-WIDE ADJUSTMENT TO COM12 PENSATE FOR FLOOD CONTROL PROJECTS.—

13 For any area within which such flood insurance

14 premium rates have increased as a result of in15 duced flooding risk from flood control or miti16 gation projects, as determined by the Director,

17 the Director may provide for additional adjust18 ments in such premium rates for properties lo19 cated in such area, except that the adjustment

20 shall not reduce premium rates below the rate

21 that would have been charged absent the risk of

22 induced flooding from the flood control or miti23 gation projects.

24 ‘‘(D) PROPERTY-SPECIFIC ADJUSTMENT

25 FOR MITIGATION MEASURES.—For any property
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1 for which any flood damage mitigation measure

2 has been completed that reduces the risk of

3 flood damage to the property to the extent es4 tablished by the Director, the Director shall ad5 just the premium rate for flood insurance cov6 erage for such property.

7 ‘‘(3) FLOOD DAMAGE MITIGATION MEASURES.—

8 For purposes of this subsection, flood damage miti9 gation measures shall include the establishment of

10 buffer zones, flood proofing, dune construction and

11 maintenance, beach nourishment, construction and

12 maintenance of sea walls and levees, and any other

13 measures and activities that the Director considers

14 appropriate to reduce the risk of flood damage to a

15 property or an area.

16 ‘‘(4) EROSION CONTROL MEASURES.—For pur17 poses of this subsection, the term ‘erosion control

18 measures’ means any activities by an area to control

19 erosion through structural and nonstructural

20 projects.

21 ‘‘(5) FUNDS.—The Director shall carry out the

22 program under this subsection with amounts, as the

23 Director determines necessary, from the National

24 Flood Insurance Fund under section 1310 and any
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1 other amounts that may be appropriated for such

2 purpose.

3 ‘‘(6) REPORTS.—The Director shall submit a

4 report to the Congress regarding the program under

5 this subsection not later than the expiration of the

6 2-year period beginning on the date of the enact7 ment of the Flood Insurance Risk Management Act

8 of 1994. The Director shall submit a report under

9 this paragraph not less than every 2 years there10 after. Each report under this paragraph shall in11 clude an analysis of the cost-effectiveness and other

12 accomplishments and shortcomings of the program

13 and any recommendations of the Director for legisla14 tion regarding the program.’’.

15 (b) FUNDING.—Section 1310(a) of the National

16 Flood Insurance Act of 1968 (42 U.S.C. 4017(a)) is

17 amended—

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

19 end;

20 (2) by redesignating paragraph (5) as para21 graph (7); and

22 (3) by inserting after paragraph (4) the follow23 ing new paragraph:

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

25 1315(b);’’.
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1 SEC. 203. COMMUNITY PREMIUM-POOLING PROGRAM.

2 Part C of chapter II of the National Flood Insurance

3 Act of 1968 (42 U.S.C. 4081 et seq.) is amended by add4 ing at the end the following new section:

5 ‘‘COMMUNITY PREMIUM-POOLING PROGRAM

6 ‘‘SEC. 1349. (a) IN GENERAL.—The Director shall

7 carry out a program under which the premiums for flood

8 insurance coverage under this title for all properties in an

9 area (or subdivision thereof) may be paid to the Director

10 by a single appropriate public body or agency.

11 ‘‘(b) POOLING AGREEMENT.—Under the program,

12 the Director shall allow such payment to be made only

13 if the Director and such body or agency enter into a writ14 ten agreement under which—

15 ‘‘(1) the area to which such agreement applies

16 is clearly defined;

17 ‘‘(2) the public body or agency entering into the

18 agreement has jurisdiction over the entire area for

19 which such premium payments will be made;

20 ‘‘(3) the term of the agreement is clearly

21 stated;

22 ‘‘(4) the Director authorizes the public body or

23 agency to collect premiums charged for flood insur24 ance coverage under this title, on behalf of the Di25 rector during the term of the agreement, for each

26 property located in the area that is covered during
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1 the term of the agreement (including structures

2 newly constructed during the term of the agree3 ment), or such lesser amount as may be agreed to

4 by the Director and the public body or agency; and

5 ‘‘(5) the amount to be paid to the Director by

6 the public agency or body is equal to the sum of all

7 premiums charged for flood insurance coverage

8 under this title during the term of the agreement for

9 all properties located in the area that are covered

10 during the term of the agreement.

11 ‘‘(c) EXEMPTION FROM ESCROW REQUIREMENTS.—

12 During the term of an agreement under subsection (b),

13 section 102(d) of the Flood Disaster Protection Act of

14 1973 shall not apply to any loan secured by a property

15 located in the area to which the agreement applies.’’.

16 SEC. 204. MAXIMUM FLOOD INSURANCE COVERAGE

17 AMOUNTS.

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

19 Flood Insurance Act of 1968 (42 U.S.C. 4013(b)) is

20 amended as follows:

21 (1) RESIDENTIAL PROPERTY.—In paragraph

22 (2), by striking ‘‘an amount of $150,000 under the

23 provisions of this clause’’ and inserting the follow24 ing: ‘‘a total amount (including such limits specified

25 in paragraph (1)(A)(i)) equal to the dollar amount
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1 limitation pursuant to section 305(a)(2) of the Fed2 eral Home Loan Mortgage Corporation Act in effect

3 for a single-family residence’’.

4 (2) RESIDENTIAL PROPERTY CONTENTS.—In

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

6 under the provisions of this clause’’ and inserting

7 the following: ‘‘a total amount (including such limits

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

9 (3) NONRESIDENTIAL PROPERTY AND CON10 TENTS.—By striking paragraph (4) and inserting

11 the following new paragraph:

12 ‘‘(4) in the case of any nonresidential property,

13 including churches, for which the risk premium rate

14 is determined in accordance with the provisions of

15 section 1307(a)(1), additional flood insurance in ex16 cess of the limits specified in subparagraphs (B) and

17 (C) of paragraph (1) shall be made available to

18 every insured upon renewal and every applicant for

19 insurance, in respect to any single structure, up to

20 a total amount (including such limits specified in

21 subparagraph (B) or (C) or paragraph (1), as appli22 cable) of $500,000 for each structure and $500,000

23 for any contents related to each structure; and’’.
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1 (b) REMOVAL OF CEILING ON COVERAGE RE2 QUIRED.—Section 1306(b) of the National Flood Insur3 ance Act of 1968 (42 U.S.C. 4013(b)) is amended—

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

5 end and inserting a period; and

6 (2) by striking paragraph (6).

7 SEC. 205. STUDY OF ECONOMIC EFFECTS OF CHARGING AC8 TUARIALLY-BASED PREMIUM RATES FOR

9 PRE-FIRM STRUCTURES.

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

11 Management Agency (in this section referred to as the

12 ‘‘Director’’) shall conduct a study of the economic effects

13 that would result from increasing premium rates for flood

14 insurance coverage made available under the national

15 flood insurance program for pre-FIRM structures to the

16 full actuarially based premium rate determined under sec17 tion 1307(a)(1) of the National Flood Insurance Act of

18 1968 for the area in which the property is located. In con19 ducting the study, the Director shall—

20 (1) determine each area that would be subject

21 to such increased premium rates; and

22 (2) for each such area, determine—

23 (A) the amount by which premium rates

24 would be increased;
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1 (B) the number and types of properties af2 fected and the number and types of properties

3 covered by flood insurance under this title likely

4 to cancel such insurance if the rate increases

5 were made;

6 (C) the effects that the increased premium

7 rates would have on land values and property

8 taxes; and

9 (D) any other effects that the increased

10 premium rates would have on the economy and

11 homeowners.

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

13 purposes of subsection (a), the term ‘‘pre-FIRM struc14 ture’’ means a structure that was not constructed or sub15 stantially improved after the later of—

16 (1) December 31, 1974; or

17 (2) the effective date of the initial rate map

18 published by the Director under section 1360(a)(2)

19 of the National Flood Insurance Act of 1968 for the

20 area in which such structure is located.

21 (c) REPORT.—The Director shall submit a report to

22 the Congress describing and explaining the findings of the

23 study conducted under this section. The report shall be

24 submitted not later than 12 months after the date of the

25 enactment of this Act.
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1 SEC. 206. GAO STUDY OF ECONOMIC IMPACT OF EROSION

2 HAZARD AREAS.

3 (a) REPORT TO CONGRESS.—Not later than 3 years

4 after the date of enactment of this Act, the Comptroller

5 General of the United States shall submit to the Congress

6 a report assessing the economic impact of the denial of

7 flood insurance and the establishment of actuarial rates

8 on communities that are likely to be identified as having

9 erosion hazard areas. The report shall include—

10 (1) a listing of all communities that are likely

11 to be identified having an erosion hazard area;

12 (2) an independent assessment, after consulta13 tion with such communities, of the economic impact

14 of the denial of flood insurance for new construction

15 and the assessment of actuarial rates in the erosion

16 hazard areas, including the impact on—

17 (A) the value of residential and commercial

18 properties in the erosion hazard area;

19 (B) community tax revenues due to

20 changes in property values or commercial activ21 ity;

22 (C) employment, including the potential

23 loss of existing and new jobs in the community;

24 (D) existing businesses and future eco25 nomic development; and
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1 (E) the estimated cost of Federal and

2 State disaster assistance to flood victims that

3 would have otherwise been insured by available

4 and affordable flood insurance;

5 (3) an estimate of the cross-subsidy of insur6 ance premiums in such communities, and the impact

7 of eliminating the cross-subsidy on those commu8 nities and the financial condition of the National

9 Flood Insurance Fund;

10 (4) the estimated savings to the National Flood

11 Insurance Program likely to result from expending

12 $25,000,000 from the National Flood Insurance

13 Fund to map erosion hazard areas; and

14 (5) an assessment of the need for the develop15 ment of a Community Erosion Hazard Management

16 Program and, if needed, recommendations consistent

17 with the goal of providing affordable flood insurance

18 protection under the National Flood Insurance Pro19 gram, which would minimize the economic impact on

20 communities assessed under paragraph (2).

21 (b) DEFINITION OF EROSION HAZARD AREA.—For

22 the purposes of this section, the term ‘‘erosion hazard

23 area’’ means, based on erosion rate information and other

24 historical data available, an area where erosion or avulsion
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1 is likely to result in damage to or loss of buildings and

2 infrastructure during a 60-year period.

3 TITLE III—REVOLVING LOAN

4 FUND FOR FLOOD AND ERO5 SION DAMAGE MITIGATION

6 ACTIVITIES AND ADDITIONAL

7 MITIGATION COVERAGE

8 SEC. 301. FLOOD AND EROSION RISK MANAGEMENT FUND.

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

10 Insurance Act of 1968 (42 U.S.C. 4101 et seq.) is amend11 ed by adding at the end the following new section:

12 ‘‘LOANS FOR FLOOD AND EROSION RISK MANAGEMENT

13 ‘‘SEC. 1365. (a) ESTABLISHMENT OF FUND AND

14 USE.—There is established in the Treasury of the United

15 States a revolving fund to be known as the Flood and Ero16 sion Risk Management Fund (in this section referred to

17 as the ‘Fund’). To the extent provided in appropriation

18 Acts, amounts in the Fund may be used only by the Direc19 tor for making loans under subsection (d) and investments

20 under subsection (c), and to repay any amounts borrowed

21 pursuant to subsection (b)(2) with interest on such

22 amounts.

23 ‘‘(b) CREDITS.—The Fund shall be credited with—

24 ‘‘(1) any surcharges collected under section

25 1308(e);
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1 ‘‘(2) any amounts borrowed pursuant to sub2 section (e);

3 ‘‘(3) any loan repayments under subsection

4 (d)(3);

5 ‘‘(4) any interest earned on investments of the

6 Fund pursuant to subsection (c);

7 ‘‘(5) any amounts repaid or recovered under

8 subsection (d)(4); and

9 ‘‘(6) any other receipts or proceeds derived

10 from any claim or other assets acquired by the Di11 rector pursuant to this section.

12 ‘‘(c) INVESTMENTS.—If the Director determines that

13 the amounts in the Fund are in excess of amounts needed

14 for loans under subsection (d), the Director may invest

15 any excess amounts the Director determines advisable in

16 interest-bearing obligations issued or guaranteed by the

17 United States.

18 ‘‘(d) LOANS.—

19 ‘‘(1) AUTHORITY.—Using amounts in the

20 Fund, the Director may make loans—

21 ‘‘(A) to public bodies or agencies of com22 munities participating in the national flood in23 surance program pursuant to section 1315 for

24 the purpose of carrying out flood damage and
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1 erosion mitigation activities for the community;

2 and

3 ‘‘(B) to individuals who own property cov4 ered by a contract for flood insurance under

5 this title for the purposes of carrying out flood

6 damage and erosion mitigation activities for the

7 property.

8 ‘‘(2) ELIGIBLE ACTIVITIES.—Amounts from

9 loans made under this subsection may be used only

10 for carrying out the flood damage and erosion miti11 gation activities that have been described in the ap12 plication for the loan and approved by the Director.

13 The Director shall determine activities eligible for

14 loans under this subsection, which shall include flood

15 proofing, dune construction and maintenance, acqui16 sition of property by public entities for public owner17 ship or the establishment of buffer zones, beach

18 nourishment, construction, repair, or maintenance of

19 sea walls and levees, and any other measures and

20 activities that the Director considers appropriate to

21 reduce the risk of flood damage and erosion to a

22 property or an area.

23 ‘‘(3) INTEREST AND REPAYMENT.—Loans made

24 under this section shall bear interest at a rate deter25 mined by the Director, which may not exceed 3 per-
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1 cent per annum, and shall be repayable to the Fund

2 at such time and upon such terms and conditions es3 tablished and agreed to by the Director and the

4 borrower.

5 ‘‘(4) DEFAULT.—Each agreement for a loan

6 made under this section shall provide that if the Di7 rector determines at any time that the borrower has

8 not used the amounts of the loan in accordance with

9 this subsection or the provisions of the loan agree10 ment, the Director may—

11 ‘‘(A) recover the amount of the loan; or

12 ‘‘(B) require the borrower to repay the

13 amount of the loan within the term of the loan

14 at an annual rate of interest over such term

15 equal to the sum of the existing annual rate for

16 comparable commercial loans, as determined by

17 the Director, plus 1 percent.

18 ‘‘(e) BORROWING AUTHORITY.—

19 ‘‘(1) INITIAL.—Pursuant to section 1310(a)(6),

20 upon the establishment of the Fund under this sec21 tion and with the approval of the Secretary of the

22 Treasury, the Director may borrow an amount from

23 the National Flood Insurance Fund not exceeding

24 $20,000,000 for deposit in the Fund under this

25 section.
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1 ‘‘(2) ONGOING.—In addition to any amounts

2 borrowed under paragraph (1), before October 1,

3 1999, the Director may, with the approval of the

4 Secretary of the Treasury, borrow amounts from the

5 National Flood Insurance Act pursuant to section

6 1310(a)(6) for deposit in the Fund under this sec7 tion. The sum of amounts borrowed under this para8 graph may not exceed $30,000,000.

9 ‘‘(3) TERMS AND CONDITIONS.—Any amounts

10 borrowed under this subsection shall be repaid to the

11 National Flood Insurance Fund, with interest, and

12 shall be evidenced by notes and other obligations is13 sued by the Director. The notes and obligations shall

14 be in such forms and denominations, bear such ma15 turities, and be subject to such terms and conditions

16 as may be prescribed by the Director, with the ap17 proval of the Secretary of the Treasury. Such notes

18 and other obligations shall bear interest at a rate de19 termined by the Secretary of the Treasury, taking

20 into consideration the current average market yield

21 on outstanding marketable obligations of the United

22 States of comparable maturities during the month

23 preceding the issuance of such notes or other obliga24 tions.’’.
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1 (b) NATIONAL FLOOD INSURANCE FUND.—Section

2 1310 of the National Flood Insurance Act of 1968 (42

3 U.S.C. 4017) is amended—

4 (1) in subsection (a), by inserting after para5 graph (5) (as added by section 202(b)(3) of this

6 Act) the following new paragraph:

7 ‘‘(6) for making loans to the Flood and Erosion

8 Risk Management Fund, subject to the provisions of

9 section 1365(e); and’’; and

10 (2) in subsection (b), by inserting after para11 graph (6) (as added by section 105(b)(3) of this

12 Act) the following new paragraph:

13 ‘‘(7) repayments of amounts borrowed under

14 section 1365(e) and interest on such amounts;’’.

15 SEC. 302. FLOOD INSURANCE PREMIUM SURCHARGES.

16 Section 1308 of the National Flood Insurance Act of

17 1968 (42 U.S.C. 4015) is amended by adding at the end

18 the following new subsection:

19 ‘‘(e) INSURANCE PREMIUM SURCHARGES FOR FLOOD

20 RISK MANAGEMENT.—

21 ‘‘(1) MANDATORY ONE-TIME SURCHARGE.—

22 Notwithstanding any other provision of this title, the

23 Director shall assess, with respect to each contract

24 for flood insurance coverage under this title issued

25 or renewed after the date of the enactment of the
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1 Flood Insurance Risk Management Act of 1994, a

2 surcharge of—

3 ‘‘(A) $15 for each principal residence cov4 ered under the policy; and

5 ‘‘(B) $40 for each secondary residence or

6 structure other than a primary residence (in7 cluding commercial structures) covered under

8 the policy.

9 The Director may not assess a surcharge under this

10 paragraph for any residence or other structure for

11 which such a surcharge has previously been assessed

12 and paid.

13 ‘‘(2) AUTHORITY FOR POLICY-TERM SUR14 CHARGES.—If the Director determines that the

15 amounts in the Flood Risk Management Fund es16 tablished under section 1365(a) are insufficient to

17 meet the demand for loans under section 1365(d),

18 the Director may assess, with respect to each con19 tract for flood insurance coverage under this title is20 sued or renewed after a date established by the Di21 rector, a surcharge of—

22 ‘‘(A) $5 per policy term, for each structure

23 that is a principal residence covered under the

24 policy; and
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1 ‘‘(B) $15 per policy term, for each struc2 ture that is a secondary residence or structure

3 other than a primary residence (including a

4 commercial structure) covered under the policy.

5 The Director may terminate the surcharges estab6 lished under this paragraph at any time, in the dis7 cretion of the Director.

8 ‘‘(3) DEPOSIT IN MITIGATION FUND.—Any sur9 charges collected under this subsection shall be paid

10 into the Flood Risk Management Fund established

11 under section 1365(a).

12 ‘‘(4) EXEMPTION.—The surcharges under this

13 subsection shall not be subject to any agents’ com14 missions, company expenses allowances, or State or

15 local premium taxes.’’.

16 SEC. 303. ADDITIONAL COVERAGE FOR MITIGATION ACTIVI17 TIES.

18 (a) BASIC AUTHORITY.—Section 1304(a) of the Na19 tional Flood Insurance Act of 1968 (42 U.S.C. 4011(a))

20 is amended by adding after the period at the end the fol21 lowing new sentence: ‘‘Insurance made available under

22 this title shall include coverage for certain costs of comply23 ing with land use and control measures adopted pursuant

24 to section 1315, as provided in section 1306(c)’’.
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1 (b) TERMS OF MITIGATION COVERAGE.—Section

2 1306 of the National Flood Insurance Act of 1968 (42

3 U.S.C. 4011(a)) is amended by adding at the end the fol4 lowing new subsection:

5 ‘‘(d) TERMS OF MITIGATION COVERAGE.—Coverage

6 under flood insurance made available under this title shall

7 provide payment for a portion of the costs of activities to

8 bring a property into compliance with land use and control

9 measures adopted pursuant to section 1315, pursuant to

10 an approved claim for such costs and subject to the follow11 ing limitations:

12 ‘‘(1) REPETITIVE LOSS REQUIREMENT.—Such

13 coverage shall only cover such costs incurred for a

14 property that is determined to be repetitive loss

15 structure for purposes of section 1308(g).

16 ‘‘(2) POST-FLOOD EVENT CLAIMS.—Such cov17 erage shall provide payment for 40 percent of the

18 costs of such compliance activities that are per19 formed after the first flood event resulting in dam20 age to the property that occurs after the property

21 becomes a repetitive loss structure for purposes of

22 section 1308(g).

23 ‘‘(3) PRE-FLOOD EVENT CLAIMS.—Such cov24 erage shall provide payment for 60 percent of the

25 costs of such compliance activities that are per-
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1 formed before the flood event resulting in damage to

2 the property that occurs after the property becomes

3 a repetitive loss structure for purposes of section

4 1308(g).’’.

5 (c) SURCHARGES FOR MITIGATION COVERAGE.—

6 (1) IN GENERAL.—Section 1308 of the Na7 tional Flood Insurance Act of 1968 (42 U.S.C.

8 4015) is amended by adding after subsection (e) (as

9 added by section 302 of this Act) the following new

10 subsection:

11 ‘‘(f) MITIGATION COVERAGE SURCHARGES.—

12 ‘‘(1) IN GENERAL.—Notwithstanding any other

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

14 respect to each contract for flood insurance coverage

15 under this title issued or renewed after the date of

16 the enactment of the Flood Insurance Risk Manage17 ment Act of 1994, a surcharge of—

18 ‘‘(A) $20 per policy term, for each struc19 ture that is a principal residence covered under

20 the policy; and

21 ‘‘(B) $30 per policy term, for each struc22 ture that is a secondary residence or structure

23 other than a primary residence (including a

24 commercial structure) covered under the policy.
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1 ‘‘(2) DEPOSIT IN FLOOD INSURANCE FUND.—

2 Any surcharges collected under this subsection shall

3 be paid into the National Flood Insurance Fund

4 established under section 1310.’’.

5 (2) NATIONAL FLOOD INSURANCE FUND.—Sec6 tion 1310(b) of the National Flood Insurance Act of

7 1968 (42 U.S.C. 4017(b)) is amended by inserting

8 after paragraph (7) (as added by section 301(b)(2)

9 of this Act) the following new paragraph:

10 ‘‘(8) any surcharges collected under section

11 1308(f); and’’.

12 TITLE IV—MISCELLANEOUS

13 PROVISIONS

14 SEC. 401. EXTENSION OF FLOOD INSURANCE PROGRAM.

15 (a) IN GENERAL.—Section 1319 of the National

16 Flood Insurance Act of 1968 (42 U.S.C. 4026) is amended

17 by striking ‘‘September 30, 1995’’ and inserting ‘‘Septem18 ber 30, 1999’’.

19 (b) EMERGENCY IMPLEMENTATION.—Section

20 1336(a) of the National Flood Insurance Act of 1968 (42

21 U.S.C. 4056(a)) is amended by striking ‘‘September 30,

22 1995’’ and inserting ‘‘September 30, 1999’’.

23 (c) LIMITATION ON ANNUAL PREMIUM INCREASES.—

24 Section 541(d) of the Housing and Community Develop25 ment Act of 1987 (42 U.S.C. 4015 note) is amended by
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1 striking ‘‘September 30, 1995’’ and inserting ‘‘September

2 30, 1999’’.

3 SEC. 402. TERMINATION OF EROSION-THREATENED STRUC4 TURES PROGRAM.

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

6 Flood Insurance Act of 1968 (42 U.S.C. 4013) is amend7 ed—

8 (1) by striking subsection (c); and

9 (2) by redesignating subsection (d) (as added

10 by section 303(b) of this Act) as subsection (c).

11 (b) TRANSITION PHASE.—Notwithstanding sub12 section (a), during the 1-year period beginning on the date

13 of the enactment of this Act, the Director of the Federal

14 Emergency Management Agency may pay amounts under

15 flood insurance contracts for demolition or relocation of

16 structures as provided in section 1306(c) of the National

17 Flood Insurance Act of 1968 (as in effect immediately be18 fore the enactment of this Act).

19 (c) SAVINGS PROVISION.—Notwithstanding sub20 section (a), the Director shall take any action necessary

21 to make payments under flood insurance contracts pursu22 ant to any commitments made before the expiration of the

23 period referred to in subsection (b) pursuant to the au24 thority under section 1306(c) of the National Flood Insur-
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1 ance Act of 1968 (as in effect immediately before the en2 actment of this Act) or subsection (b).

3 SEC. 403. LIMITATIONS ON CLAIMS FOR REPETITIVELY

4 DAMAGED STRUCTURES.

5 Section 1308 of the National Flood Insurance Act of

6 1968 (42 U.S.C. 4013) is amended by adding after sub7 section (f) (as added by section 303(c) of this Act) the

8 following new subsection:

9 ‘‘(g) RATES FOR REPETITIVE LOSS STRUCTURES.—

10 ‘‘(1) IN GENERAL.—Subject only to paragraphs

11 (2) and (3), after the expiration of the 3-year period

12 beginning on the date of the enactment of the Flood

13 Insurance Risk Management Act of 1994, the

14 chargeable rate with respect to any repetitive loss

15 structure shall be not less than the applicable esti16 mated risk premium rate under section 1307(a)(1)

17 for the area (or subdivision thereof) in which the

18 structure is located.

19 ‘‘(2) LIMITATION ON PREMIUM INCREASES.—

20 The Director may not, pursuant to this subsection,

21 increase the risk premium rates charged for flood in22 surance under this title for any repetitive loss struc23 ture by an amount that would result in the sum of

24 such rate increases for the structure during any 12-

25 month period exceeding 5 percent of the amount of
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1 the risk premium rate applicable to the property

2 upon the commencement of the 12-month period.

3 ‘‘(3) EXEMPTION FOR CERTAIN STRUCTURES.—

4 The Director shall exempt any repetitive loss struc5 ture for which construction or substantial improve6 ment was started before January 1, 1975, from the

7 requirements of paragraph (1), if the Director deter8 mines that the physical and structural characteris9 tics of the structure prevent taking any flood dam10 age mitigation activities that (A) have a reasonable

11 cost (taking into consideration the value of the

12 structure), and (B) would substantially reduce the

13 risk of flood damage to the structure.

14 ‘‘(4) REPETITIVE LOSS STRUCTURE.—For pur15 poses of this subsection, a repetitive loss structure

16 shall be any structure that the Director has deter17 mined—

18 ‘‘(A) is covered by a contract for flood in19 surance under this title under which, imme20 diately before the determination under this

21 paragraph, the chargeable rate was less than

22 the applicable estimated risk premium rate

23 under section 1307(a)(1) for the area (or sub24 division thereof) in which the structure is

25 located;
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1 ‘‘(B) has incurred significant flood damage

2 on not less than 2 occasions over the 10-year

3 period ending upon the determination under

4 this paragraph and the damage on each such

5 occasion equaled or exceeded 25 percent of the

6 value of the structure at the time of the flood

7 event.’’.

8 SEC. 404. PENALTIES FOR REPETITIVE CLAIMS.

9 Section 1312 of the National Flood Insurance Act of

10 1968 (42 U.S.C. 4019) is amended—

11 (1) by inserting ‘‘(a) IN GENERAL.—’’ before

12 ‘‘The Director’’; and

13 (2) by adding at the end the following new sub14 section:

15 ‘‘(b) PENALTIES FOR REPETITIVE CLAIMS.—

16 ‘‘(1) IN GENERAL.—In making coverage for

17 flood insurance available under this title, the Direc18 tor shall establish a schedule of penalties for repet19 itive claims for losses covered by flood insurance and

20 shall charge such a penalty according to the sched21 ule upon approval of any such claim or deduct the

22 amount of the penalty from the payment of any such

23 approved claim. Such penalties shall apply only to

24 contracts for flood insurance entered into after the

25 expiration of the 1-year period beginning upon the
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1 date of the enactment of the Flood Insurance Risk

2 Management Act of 1994.

3 ‘‘(2) TERMS.—In establishing the amount of

4 any penalty under this subsection for a repetitive

5 claim, the Director shall consider the number of

6 claims made on a property and approved before the

7 repetitive claim for which the penalty is imposed and

8 the amounts of such prior claims.

9 ‘‘(3) REPETITIVE CLAIM.—For purposes of this

10 subsection, a repetitive claim shall be a proved and

11 approved claim for losses to a property under a con12 tract for flood insurance under this title that—

13 ‘‘(A) equals or exceeds $5,000; and

14 ‘‘(B) is made for the same property for

15 which 2 or more previous claims under a con16 tract for flood insurance under this title have

17 been made and approved, each of which equaled

18 or exceeded $5,000.’’.

19 SEC. 405. 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

23 period at the end and inserting the following: ‘‘and without

24 regard to the provisions of the Federal Advisory Commit25 tee Act (5 U.S.C. App.).’’.
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1 SEC. 406. AUTHORIZATION OF APPROPRIATIONS.

2 There are authorized to appropriated such sums as

3 may be necessary to carry out this Act and the amend4 ments made by this Act.

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