108TH CONGRESS

2D SESSION S. 2238

AN ACT

To amend the National Flood Insurance Act of 1968 to

reduce losses to properties for which repetitive flood insurance claim payments have been made.

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; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Bunning-Bereuter-Blumenaur Flood Insurance Reform

6 Act of 2004’’.
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1 (b) TABLE OF CONTENTS.—The table of contents for

2 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Congressional findings.

TITLE I—AMENDMENTS TO FLOOD INSURANCE ACT OF 1968

Sec. 101. Extension of program and consolidation of authorizations.

Sec. 102. Establishment of pilot program for mitigation of severe repetitive loss

properties.

Sec. 103. Amendments to existing flood mitigation assistance program.

Sec. 104. FEMA authority to fund mitigation activities for individual repetitive

claims properties.

Sec. 105. Amendments to additional coverage for compliance with land use and

control measures.

Sec. 106. Actuarial rate properties.

Sec. 107. Geospatial digital flood hazard data.

Sec. 108. Replacement of mobile homes on original sites.

Sec. 109. Reiteration of FEMA responsibility to map mudslides.

TITLE II—MISCELLANEOUS PROVISIONS

Sec. 201. Definitions.

Sec. 202. Supplemental forms.

Sec. 203. Acknowledgement form.

Sec. 204. Flood insurance claims handbook.

Sec. 205. Appeal of decisions relating to flood insurance coverage.

Sec. 206. Study and report on use of cost compliance coverage.

Sec. 207. Minimum training and education requirements.

Sec. 208. GAO study and report.

Sec. 209. Prospective payment of flood insurance premiums.

Sec. 210. Report on changes to fee schedule or fee payment arrangements.

3 SEC. 2. CONGRESSIONAL FINDINGS.

4 The Congress finds that—

5 (1) the national flood insurance program—

6 (A) identifies the flood risk;

7 (B) provides flood risk information to the

8 public;

9 (C) encourages State and local govern10 ments to make appropriate land use adjust11 ments to constrict the development of land
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1 which is exposed to flood damage and minimize

2 damage caused by flood losses; and

3 (D) makes flood insurance available on a

4 nationwide basis that would otherwise not be

5 available, to accelerate recovery from floods,

6 mitigate future losses, save lives, and reduce

7 the personal and national costs of flood disas8 ters;

9 (2) the national flood insurance program in10 sures approximately 4,400,000 policyholders;

11 (3) approximately 48,000 properties currently

12 insured under the program have experienced, within

13 a 10-year period, 2 or more flood losses where each

14 such loss exceeds the amount $1,000;

15 (4) approximately 10,000 of these repetitive16 loss properties have experienced either 2 or 3 losses

17 that cumulatively exceed building value or 4 or more

18 losses, each exceeding $1,000;

19 (5) repetitive-loss properties constitute a signifi20 cant drain on the resources of the national flood in21 surance program, costing about $200,000,000 annu22 ally;

23 (6) repetitive-loss properties comprise approxi24 mately 1 percent of currently insured properties but
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1 are expected to account for 25 to 30 percent of

2 claims losses;

3 (7) the vast majority of repetitive-loss prop4 erties were built before local community implementa5 tion of floodplain management standards under the

6 program and thus are eligible for subsidized flood in7 surance;

8 (8) while some property owners take advantage

9 of the program allowing subsidized flood insurance

10 without requiring mitigation action, others are

11 trapped in a vicious cycle of suffering flooding, then

12 repairing flood damage, then suffering flooding,

13 without the means to mitigate losses or move out of

14 harm’s way;

15 (9) mitigation of repetitive-loss properties

16 through buyouts, elevations, relocations, or flood17 proofing will produce savings for policyholders under

18 the program and for Federal taxpayers through re19 duced flood insurance losses and reduced Federal

20 disaster assistance;

21 (10) a strategy of making mitigation offers

22 aimed at high-priority repetitive-loss properties and

23 shifting more of the burden of recovery costs to

24 property owners who choose to remain vulnerable to

25 repetitive flood damage can encourage property own-
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1 ers to take appropriate actions that reduce loss of

2 life and property damage and benefit the financial

3 soundness of the program;

4 (11) the method for addressing repetitive-loss

5 properties should be flexible enough to take into con6 sideration legitimate circumstances that may prevent

7 an owner from taking a mitigation action; and

8 (12) focusing the mitigation and buy-out of re9 petitive loss properties upon communities and prop10 erty owners that choose to voluntarily participate in

11 a mitigation and buy-out program will maximize the

12 benefits of such a program, while minimizing any

13 adverse impact on communities and property owners.

14 TITLE I—AMENDMENTS TO

15 FLOOD INSURANCE ACT OF 1968

16 SEC. 101. EXTENSION OF PROGRAM AND CONSOLIDATION

17 OF AUTHORIZATIONS.

18 (a) BORROWING AUTHORITY.—The first sentence of

19 section 1309(a) of the National Flood Insurance Act of

20 1968 (42 U.S.C. 4016(a)), is amended by striking

21 ‘‘through December’’ and all that follows through ‘‘, and’’

22 and inserting ‘‘through the date specified in section 1319,

23 and’’.

24 (b) AUTHORITY FOR CONTRACTS.—Section 1319 of

25 the National Flood Insurance Act of 1968 (42 U.S.C.
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1 4026), is amended by striking ‘‘after’’ and all that follows

2 and inserting ‘‘after September 30, 2008.’’.

3 (c) EMERGENCY IMPLEMENTATION.—Section

4 1336(a) of the National Flood Insurance Act of 1968 (42

5 U.S.C. 4056(a)), is amended by striking ‘‘during the pe6 riod’’ and all that follows through ‘‘in accordance’’ and

7 inserting ‘‘during the period ending on the date specified

8 in section 1319, in accordance’’.

9 (d) AUTHORIZATION OF APPROPRIATIONS FOR STUD10 IES.—Section 1376(c) of the National Flood Insurance

11 Act of 1968 (42 U.S.C. 4127(c)), is amended by striking

12 ‘‘through’’ and all that follows and inserting ‘‘through the

13 date specified in section 1319, for studies under this

14 title.’’.

15 SEC. 102. ESTABLISHMENT OF PILOT PROGRAM FOR MITI16 GATION OF SEVERE REPETITIVE LOSS PROP17 ERTIES.

18 (a) IN GENERAL.—The National Flood Insurance

19 Act of 1968 is amended by inserting after section 1361

20 (42 U.S.C. 4102) the following:

21 ‘‘SEC. 1361A. PILOT PROGRAM FOR MITIGATION OF SEVERE

22 REPETITIVE LOSS PROPERTIES.

23 ‘‘(a) AUTHORITY.—To the extent amounts are made

24 available for use under this section, the Director may, sub25 ject to the limitations of this section, provide financial as-
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1 sistance to States and communities that decide to partici2 pate in the pilot program established under this section

3 for taking actions with respect to severe repetitive loss

4 properties (as such term is defined in subsection (b)) to

5 mitigate flood damage to such properties and losses to the

6 National Flood Insurance Fund from such properties.

7 ‘‘(b) SEVERE REPETITIVE LOSS PROPERTY.—For

8 purposes of this section, the term ‘severe repetitive loss

9 property’ has the following meaning:

10 ‘‘(1) SINGLE-FAMILY PROPERTIES.—In the case

11 of a property consisting of 1 to 4 residences, such

12 term means a property that—

13 ‘‘(A) is covered under a contract for flood

14 insurance made available under this title; and

15 ‘‘(B) has incurred flood-related damage—

16 ‘‘(i) for which 4 or more separate

17 claims payments have been made under

18 flood insurance coverage under this title,

19 with the amount of each such claim ex20 ceeding $5,000, and with the cumulative

21 amount of such claims payments exceeding

22 $20,000; or

23 ‘‘(ii) for which at least 2 separate

24 claims payments have been made under

25 such coverage, with the cumulative amount
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1 of such claims exceeding the value of the

2 property.

3 ‘‘(2) MULTIFAMILY PROPERTIES.—In the case

4 of a property consisting of 5 or more residences,

5 such term shall have such meaning as the Director

6 shall by regulation provide.

7 ‘‘(c) ELIGIBLE ACTIVITIES.—Amounts provided

8 under this section to a State or community may be used

9 only for the following activities:

10 ‘‘(1) MITIGATION ACTIVITIES.—To carry out

11 mitigation activities that reduce flood damages to se12 vere repetitive loss properties, including elevation,

13 relocation, demolition, and floodproofing of struc14 tures, and minor physical localized flood control

15 projects, and the demolition and rebuilding of prop16 erties to at least Base Flood Elevation or greater, if

17 required by any local ordinance.

18 ‘‘(2) PURCHASE.—To purchase severe repetitive

19 loss properties, subject to subsection (g).

20 ‘‘(d) MATCHING REQUIREMENT.—

21 ‘‘(1) IN GENERAL.—Except as provided in para22 graph (2), in any fiscal year the Director may not

23 provide assistance under this section to a State or

24 community in an amount exceeding 3 times the

25 amount that the State or community certifies, as the
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1 Director shall require, that the State or community

2 will contribute from non-Federal funds for carrying

3 out the eligible activities to be funded with such as4 sistance amounts.

5 ‘‘(2) REDUCED COMMUNITY MATCH.—With re6 spect to any 1-year period in which assistance is

7 made available under this section, the Director may

8 adjust the contribution required under paragraph

9 (1) by any State, and for the communities located

10 in that State, to not less than 10 percent of the cost

11 of the activities for each severe repetitive loss prop12 erty for which grant amounts are provided if, for

13 such year—

14 ‘‘(A) the State has an approved State miti15 gation plan meeting the requirements for haz16 ard mitigation planning under section 322 of

17 the Robert T. Stafford Disaster Relief and

18 Emergency Assistance Act (42 U.S.C. 5165)

19 that specifies how the State intends to reduce

20 the number of severe repetitive loss properties;

21 and

22 ‘‘(B) the Director determines, after con23 sultation with the State, that the State has

24 taken actions to reduce the number of such

25 properties.
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1 ‘‘(3) NON-FEDERAL FUNDS.—For purposes of

2 this subsection, the term ‘non-Federal funds’ in3 cludes State or local agency funds, in-kind contribu4 tions, any salary paid to staff to carry out the eligi5 ble activities of the recipient, the value of the time

6 and services contributed by volunteers to carry out

7 such activities (at a rate determined by the Direc8 tor), and the value of any donated material or build9 ing and the value of any lease on a building.

10 ‘‘(e) NOTICE OF MITIGATION PROGRAM.—

11 ‘‘(1) IN GENERAL.—Upon selecting a State or

12 community to receive assistance under subsection (a)

13 to carry out eligible activities, the Director shall no14 tify the owners of a severe repetitive loss property,

15 in plain language, within that State or community—

16 ‘‘(A) that their property meets the defini17 tion of a severe repetitive loss property under

18 this section;

19 ‘‘(B) that they may receive an offer of as20 sistance under this section;

21 ‘‘(C) of the types of assistance potentially

22 available under this section;

23 ‘‘(D) of the implications of declining such

24 offer of assistance under this section; and
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1 ‘‘(E) that there is a right to appeal under

2 this section.

3 ‘‘(2) IDENTIFICATION OF SEVERE REPETITIVE

4 LOSS PROPERTIES.—The Director shall take such

5 steps as are necessary to identify severe repetitive

6 loss properties, and submit that information to the

7 relevant States and communities.

8 ‘‘(f) STANDARDS FOR MITIGATION OFFERS.—The

9 program under this section for providing assistance for eli10 gible activities for severe repetitive loss properties shall be

11 subject to the following limitations:

12 ‘‘(1) PRIORITY.—In determining the properties

13 for which to provide assistance for eligible activities

14 under subsection (c), the Director shall provide as15 sistance for properties in the order that will result

16 in the greatest amount of savings to the National

17 Flood Insurance Fund in the shortest period of time,

18 in a manner consistent with the allocation formula

19 under paragraph (5).

20 ‘‘(2) OFFERS.—The Director shall provide as21 sistance in a manner that permits States and com22 munities to make offers to owners of severe repet23 itive loss properties to take eligible activities under

24 subsection (c) as soon as practicable.
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1 ‘‘(3) CONSULTATION.—In determining for

2 which eligible activities under subsection (c) to pro3 vide assistance with respect to a severe repetitive

4 loss property, the relevant States and communities

5 shall consult, to the extent practicable, with the

6 owner of the property.

7 ‘‘(4) DEFERENCE TO LOCAL MITIGATION DECI8 SIONS.—The Director shall not, by rule, regulation,

9 or order, establish a priority for funding eligible ac10 tivities under this section that gives preference to

11 one type or category of eligible activity over any

12 other type or category of eligible activity.

13 ‘‘(5) ALLOCATION.—

14 ‘‘(A) IN GENERAL.—Subject to subpara15 graphs (B) and (C), of the total amount made

16 available for assistance under this section in

17 any fiscal year, the Director shall allocate as18 sistance to a State, and the communities lo19 cated within that State, based upon the per20 centage of the total number of severe repetitive

21 loss properties located within that State.

22 ‘‘(B) REDISTRIBUTION.—Any funds allo23 cated to a State, and the communities within

24 the State, under subparagraph (A) that have

25 not been obligated by the end of each fiscal
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1 year shall be redistributed by the Director to

2 other States and communities to carry out eligi3 ble activities in accordance with this section.

4 ‘‘(C) EXCEPTION.—Of the total amount

5 made available for assistance under this section

6 in any fiscal year, 10 percent shall be made

7 available to communities that—

8 ‘‘(i) contain one or more severe repet9 itive loss properties; and

10 ‘‘(ii) are located in States that receive

11 little or no assistance, as determined by

12 the Director, under the allocation formula

13 under subparagraph (A).

14 ‘‘(6) NOTICE.—Upon making an offer to pro15 vide assistance with respect to a property for any eli16 gible activity under subsection (c), the State or com17 munity shall notify each holder of a recorded inter18 est on the property of such offer and activity.

19 ‘‘(g) PURCHASE OFFERS.—A State or community

20 may take action under subsection (c)(2) to purchase a se21 vere repetitive loss property only if the following require22 ments are met:

23 ‘‘(1) USE OF PROPERTY.—The State or com24 munity enters into an agreement with the Director

25 that provides assurances that the property pur-
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1 chased will be used in a manner that is consistent

2 with the requirements of section 404(b)(2)(B) of the

3 Robert T. Stafford Disaster Relief and Emergency

4 Assistance Act (42 U.S.C. 5170c(b)(2)(B)) for prop5 erties acquired, accepted, or from which a structure

6 will be removed pursuant to a project provided prop7 erty acquisition and relocation assistance under such

8 section 404(b).

9 ‘‘(2) OFFERS.—The Director shall provide as10 sistance in a manner that permits States and com11 munities to make offers to owners of severe repet12 itive loss properties and of associated land to engage

13 in eligible activities as soon as possible.

14 ‘‘(3) PURCHASE PRICE.—The amount of pur15 chase offer is not less than the greatest of—

16 ‘‘(A) the amount of the original purchase

17 price of the property, when purchased by the

18 holder of the current policy of flood insurance

19 under this title;

20 ‘‘(B) the total amount owed, at the time

21 the offer to purchase is made, under any loan

22 secured by a recorded interest on the property;

23 and

24 ‘‘(C) an amount equal to the fair market

25 value of the property immediately before the
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1 most recent flood event affecting the property,

2 or an amount equal to the current fair market

3 value of the property.

4 ‘‘(4) COMPARABLE HOUSING PAYMENT.—If a

5 purchase offer made under paragraph (2) is less

6 than the cost of the homeowner-occupant to pur7 chase a comparable replacement dwelling outside the

8 flood hazard area in the same community, the Direc9 tor shall make available an additional relocation pay10 ment to the homeowner-occupant to apply to the dif11 ference.

12 ‘‘(h) INCREASED PREMIUMS IN CASES OF REFUSAL

13 TO MITIGATE.—

14 ‘‘(1) IN GENERAL.—In any case in which the

15 owner of a severe repetitive loss property refuses an

16 offer to take action under paragraph (1) or (2) of

17 subsection (c) with respect to such property, the Di18 rector shall—

19 ‘‘(A) notify each holder of a recorded inter20 est on the property of such refusal; and

21 ‘‘(B) notwithstanding subsections (a)

22 through (c) of section 1308, thereafter the

23 chargeable premium rate with respect to the

24 property shall be the amount equal to 150 per25 cent of the chargeable rate for the property at
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1 the time that the offer was made, as adjusted

2 by any other premium adjustments otherwise

3 applicable to the property and any subsequent

4 increases pursuant to paragraph (2) and sub5 ject to the limitation under paragraph (3).

6 ‘‘(2) INCREASED PREMIUMS UPON SUBSEQUENT

7 FLOOD DAMAGE.—Notwithstanding subsections (a)

8 through (c) of section 1308, if the owner of a severe

9 repetitive loss property does not accept an offer to

10 take action under paragraph (1) or (2) of subsection

11 (c) with respect to such property and a claim pay12 ment exceeding $1,500 is made under flood insur13 ance coverage under this title for damage to the

14 property caused by a flood event occurring after

15 such offer is made, thereafter the chargeable pre16 mium rate with respect to the property shall be the

17 amount equal to 150 percent of the chargeable rate

18 for the property at the time of such flood event, as

19 adjusted by any other premium adjustments other20 wise applicable to the property and any subsequent

21 increases pursuant to this paragraph and subject to

22 the limitation under paragraph (3).

23 ‘‘(3) LIMITATION ON INCREASED PREMIUMS.—

24 In no case may the chargeable premium rate for a

25 severe repetitive loss property be increased pursuant
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1 to this subsection to an amount exceeding the appli2 cable estimated risk premium rate for the area (or

3 subdivision thereof) under section 1307(a)(1).

4 ‘‘(4) TREATMENT OF DEDUCTIBLES.—Any in5 crease in chargeable premium rates required under

6 this subsection for a severe repetitive loss property

7 may be carried out, to the extent appropriate, as de8 termined by the Director, by adjusting any deduct9 ible charged in connection with flood insurance cov10 erage under this title for the property.

11 ‘‘(5) NOTICE OF CONTINUED OFFER.—Upon

12 each renewal or modification of any flood insurance

13 coverage under this title for a severe repetitive loss

14 property, the Director shall notify the owner that

15 the offer made pursuant to subsection (c) is still

16 open.

17 ‘‘(6) APPEALS.—

18 ‘‘(A) IN GENERAL.—Any owner of a severe

19 repetitive loss property may appeal a deter20 mination of the Director to take action under

21 paragraph (1)(B) or (2) with respect to such

22 property, based only upon the following

23 grounds:

24 ‘‘(i) As a result of such action, the

25 owner of the property will not be able to
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1 purchase a replacement primary residence

2 of comparable value and that is function3 ally equivalent.

4 ‘‘(ii) Based on independent informa5 tion, such as contractor estimates or ap6 praisals, the property owner believes that

7 the price offered for purchasing the prop8 erty is not an accurate estimation of the

9 value of the property, or the amount of

10 Federal funds offered for mitigation activi11 ties, when combined with funds from non12 Federal sources, will not cover the actual

13 cost of mitigation.

14 ‘‘(iii) As a result of such action, the

15 preservation or maintenance of any pre16 historic or historic district, site, building,

17 structure, or object included in, or eligible

18 for inclusion in, the National Register of

19 Historic Places will be interfered with, im20 paired, or disrupted.

21 ‘‘(iv) The flooding that resulted in the

22 flood insurance claims described in sub23 section (b)(2) for the property resulted

24 from significant actions by a third party in
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1 violation of Federal, State, or local law, or2 dinance, or regulation.

3 ‘‘(v) In purchasing the property, the

4 owner relied upon flood insurance rate

5 maps of the Federal Emergency Manage6 ment Agency that were current at the time

7 and did not indicate that the property was

8 located in an area having special flood haz9 ards.

10 ‘‘(vi) The owner of the property,

11 based on independent information, such as

12 contractor estimates or other appraisals,

13 demonstrates that an alternative eligible

14 activity under subsection (c) is at least as

15 cost effective as the initial offer of assist16 ance.

17 ‘‘(B) PROCEDURE.—An appeal under this

18 paragraph of a determination of the Director

19 shall be made by filing, with the Director, a re20 quest for an appeal within 90 days after receiv21 ing notice of such determination. Upon receiv22 ing the request, the Director shall select, from

23 a list of independent third parties compiled by

24 the Director for such purpose, a party to hear

25 such appeal. Within 90 days after filing of the
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1 request for the appeal, such third party shall

2 review the determination of the Director and

3 shall set aside such determination if the third

4 party determines that the grounds under sub5 paragraph (A) exist. During the pendency of an

6 appeal under this paragraph, the Director shall

7 stay the applicability of the rates established

8 pursuant to paragraph (1)(B) or (2), as appli9 cable.

10 ‘‘(C) EFFECT OF FINAL DETERMINA11 TION.—In an appeal under this paragraph—

12 ‘‘(i) if a final determination is made

13 in favor of the property owner under sub14 paragraph (A) exist, the third party hear15 ing such appeal shall require the Director

16 to reduce the chargeable risk premium rate

17 for flood insurance coverage for the prop18 erty involved in the appeal from the

19 amount required under paragraph (1)(B)

20 or (2) to the amount paid prior to the offer

21 to take action under paragraph (1) or (2)

22 of subsection (c); and

23 ‘‘(ii) if a final determination is made

24 that the grounds under subparagraph (A)

25 do not exist, the Director shall promptly
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1 increase the chargeable risk premium rate

2 for such property to the amount estab3 lished pursuant to paragraph (1)(B) or

4 (2), as applicable, and shall collect from

5 the property owner the amount necessary

6 to cover the stay of the applicability of

7 such increased rates during the pendency

8 of the appeal.

9 ‘‘(D) COSTS.—If the third party hearing

10 an appeal under this paragraph is compensated

11 for such service, the costs of such compensation

12 shall be borne—

13 ‘‘(i) by the owner of the property re14 questing the appeal, if the final determina15 tion in the appeal is that the grounds

16 under subparagraph (A) do not exist; and

17 ‘‘(ii) by the National Flood Insurance

18 Fund, if such final determination is that

19 the grounds under subparagraph (A) do

20 exist.

21 ‘‘(E) REPORT.—Not later than 6 months

22 after the date of the enactment of the Bunning23 Bereuter-Blumenaur Flood Insurance Reform

24 Act of 2004, the Director shall submit a report
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1 describing the rules, procedures, and adminis2 tration for appeals under this paragraph to—

3 ‘‘(i) the Committee on Banking,

4 Housing, and Urban Affairs of the Senate;

5 and

6 ‘‘(ii) the Committee on Financial

7 Services of the House of Representatives.

8 ‘‘(i) DISCRETIONARY ACTIONS IN CASES OF FRAUDU9 LENT CLAIMS.—If the Director determines that a fraudu10 lent claim was made under flood insurance coverage under

11 this title for a severe repetitive loss property, the Director

12 may—

13 ‘‘(1) cancel the policy and deny the provision to

14 such policyholder of any new flood insurance cov15 erage under this title for the property; or

16 ‘‘(2) refuse to renew the policy with such policy17 holder upon expiration and deny the provision of any

18 new flood insurance coverage under this title to such

19 policyholder for the property.

20 ‘‘(j) RULES.—

21 ‘‘(1) IN GENERAL.—The Director shall, by

22 rule—

23 ‘‘(A) subject to subsection (f)(4), develop

24 procedures for the distribution of funds to
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1 States and communities to carry out eligible ac2 tivities under this section; and

3 ‘‘(B) ensure that the procedures developed

4 under paragraph (1)—

5 ‘‘(i) require the Director to notify

6 States and communities of the availability

7 of funding under this section, and that

8 participation in the pilot program under

9 this section is optional;

10 ‘‘(ii) provide that the Director may as11 sist States and communities in identifying

12 severe repetitive loss properties within

13 States or communities;

14 ‘‘(iii) allow each State and community

15 to select properties to be the subject of eli16 gible activities, and the appropriate eligible

17 activity to be performed with respect to

18 each severe repetitive loss property; and

19 ‘‘(iv) require each State or community

20 to submit a list of severe repetitive loss

21 properties to the Director that the State or

22 community would like to be the subject of

23 eligible activities under this section.

24 ‘‘(2) CONSULTATION.—Not later than 90 days

25 after the date of enactment of this Act, the Director
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1 shall consult with State and local officials in car2 rying out paragraph (1)(A), and provide an oppor3 tunity for an oral presentation, on the record, of

4 data and arguments from such officials.

5 ‘‘(k) FUNDING.—

6 ‘‘(1) IN GENERAL.—Pursuant to section

7 1310(a)(8), the Director may use amounts from the

8 National Flood Insurance Fund to provide assist9 ance under this section in each of fiscal years 2005,

10 2006, 2007, 2008, and 2009, except that the

11 amount so used in each such fiscal year may not ex12 ceed $40,000,000 and shall remain available until

13 expended. Notwithstanding any other provision of

14 this title, amounts made available pursuant to this

15 subsection shall not be subject to offsetting collec16 tions through premium rates for flood insurance cov17 erage under this title.

18 ‘‘(2) ADMINISTRATIVE EXPENSES.—Of the

19 amounts made available under this subsection, the

20 Director may use up to 5 percent for expenses asso21 ciated with the administration of this section.

22 ‘‘(l) TERMINATION.—The Director may not provide

23 assistance under this section to any State or community

24 after September 30, 2009.’’.
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1 (b) AVAILABILITY OF NATIONAL FLOOD INSURANCE

2 FUND AMOUNTS.—Section 1310(a) of the National Flood

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

4 (1) in paragraph (7), by striking ‘‘and’’ at the

5 end; and

6 (2) by striking paragraph (8) and inserting the

7 following:

8 ‘‘(8) for financial assistance under section

9 1361A to States and communities for taking actions

10 under such section with respect to severe repetitive

11 loss properties, but only to the extent provided in

12 section 1361A(i); and’’.

13 SEC. 103. AMENDMENTS TO EXISTING FLOOD MITIGATION

14 ASSISTANCE PROGRAM.

15 (a) STANDARD FOR APPROVAL OF MITIGATION

16 PLANS.—Section 1366(e)(3) of the National Flood Insur17 ance Act of 1968 (42 U.S.C. 4104c) is amended by adding

18 at the end the following new sentence: ‘‘The Director may

19 approve only mitigation plans that give priority for fund20 ing to such properties, or to such subsets of properties,

21 as are in the best interest of the National Flood Insurance

22 Fund.’’.

23 (b) PRIORITY FOR MITIGATION ASSISTANCE.—Sec24 tion 1366(e) of the National Flood Insurance Act of 1968
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1 (42 U.S.C. 4104c) is amended by striking paragraph (4)

2 and inserting the following:

3 ‘‘(4) PRIORITY FOR MITIGATION ASSISTANCE.—

4 In providing grants under this subsection for mitiga5 tion activities, the Director shall give first priority

6 for funding to such properties, or to such subsets of

7 such properties as the Director may establish, that

8 the Director determines are in the best interests of

9 the National Flood Insurance Fund and for which

10 matching amounts under subsection (f) are avail11 able.’’.

12 (c) COORDINATION WITH STATES AND COMMU13 NITIES.—Section 1366 of the National Flood Insurance

14 Act of 1968 (42 U.S.C. 4104c) is amended by adding at

15 the end the following:

16 ‘‘(m) COORDINATION WITH STATES AND COMMU17 NITIES.—The Director shall, in consultation and coordina18 tion with States and communities take such actions as are

19 appropriate to encourage and improve participation in the

20 national flood insurance program of owners of properties,

21 including owners of properties that are not located in

22 areas having special flood hazards (the 100-year flood23 plain), but are located within flood prone areas.’’.

24 (d) FUNDING.—Section 1367 of the National Flood

25 Insurance Act of 1968 (42 U.S.C. 4104d) is amended—
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1 (1) in subsection (b), by striking paragraph (1)

2 and inserting the following:

3 ‘‘(1) in each fiscal year, amounts from the Na4 tional Flood Insurance Fund not exceeding

5 $40,000,000, to remain available until expended;’’;

6 (2) by redesignating subsections (c) and (d) as

7 subsections (d) and (e), respectively; and

8 (3) by inserting after subsection (b) the fol9 lowing:

10 ‘‘(c) ADMINISTRATIVE EXPENSES.—The Director

11 may use not more than 5 percent of amounts made avail12 able under subsection (b) to cover salaries, expenses, and

13 other administrative costs incurred by the Director to

14 make grants and provide assistance under sections 1366

15 and 1323.’’.

16 (e) REDUCED COMMUNITY MATCH.—Section 1366(g)

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

18 4104c(g)), is amended—

19 (2) by redesignating paragraph (2) as para20 graph (3); and

21 (3) by inserting after paragraph (1) the fol22 lowing:

23 ‘‘(2) REDUCED COMMUNITY MATCH.—With re24 spect to any 1-year period in which assistance is

25 made available under this section, the Director may
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1 adjust the contribution required under paragraph

2 (1) by any State, and for the communities located

3 in that State, to not less than 10 percent of the cost

4 of the activities for each severe repetitive loss prop5 erty for which grant amounts are provided if, for

6 such year—

7 ‘‘(A) the State has an approved State miti8 gation plan meeting the requirements for haz9 ard mitigation planning under section 322 of

10 the Robert T. Stafford Disaster Relief and

11 Emergency Assistance Act (42 U.S.C. 5165)

12 that specifies how the State intends to reduce

13 the number of severe repetitive loss properties;

14 and

15 ‘‘(B) the Director determines, after con16 sultation with the State, that the State has

17 taken actions to reduce the number of such

18 properties.’’.

19 (f) NATIONAL FLOOD MITIGATION FUND.—Section

20 1366(b)(2) of the National Flood Insurance Act of 1968

21 (42 U.S.C. 4104c(b)(2)), is amended by striking

22 ‘‘$1,500,000’’ and inserting ‘‘7.5 percent of the available

23 funds under this section’’.
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1 SEC. 104. FEMA AUTHORITY TO FUND MITIGATION ACTIVI2 TIES FOR INDIVIDUAL REPETITIVE CLAIMS

3 PROPERTIES.

4 (a) IN GENERAL.—Chapter I of the National Flood

5 Insurance Act of 1968 (42 U.S.C. 4011 et seq.) is amend6 ed by adding at the end the following:

7 ‘‘SEC. 1323. GRANTS FOR REPETITIVE INSURANCE CLAIMS

8 PROPERTIES.

9 ‘‘(a) IN GENERAL.—The Director may provide fund10 ing for mitigation actions that reduce flood damages to

11 individual properties for which 1 or more claim payments

12 for losses have been made under flood insurance coverage

13 under this title, but only if the Director determines that—

14 ‘‘(1) such activities are in the best interest of

15 the National Flood Insurance Fund; and

16 ‘‘(2) such activities cannot be funded under the

17 program under section 1366 because—

18 ‘‘(A) the requirements of section 1366(g)

19 are not being met by the State or community

20 in which the property is located; or

21 ‘‘(B) the State or community does not

22 have the capacity to manage such activities.

23 ‘‘(b) PRIORITY FOR WORST-CASE PROPERTIES.—In

24 determining the properties for which funding is to be pro25 vided under this section, the Director shall consult with

26 the States in which such properties are located and pro-
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1 vide assistance for properties in the order that will result

2 in the greatest amount of savings to the National Flood

3 Insurance Fund in the shortest period of time.’’.

4 (b) AVAILABILITY OF NATIONAL FLOOD INSURANCE

5 FUND AMOUNTS.—Section 1310(a) of the National Flood

6 Insurance Act of 1968 (42 U.S.C. 4017(a)) is amended

7 by adding at the end the following:

8 ‘‘(9) for funding, not to exceed $10,000,000 in

9 any fiscal year, for mitigation actions under section

10 1323, except that, notwithstanding any other provi11 sion of this title, amounts made available pursuant

12 to this paragraph shall not be subject to offsetting

13 collections through premium rates for flood insur14 ance coverage under this title.’’.

15 SEC. 105. AMENDMENTS TO ADDITIONAL COVERAGE FOR

16 COMPLIANCE WITH LAND USE AND CONTROL

17 MEASURES.

18 (a) COMPLIANCE WITH LAND USE AND CONTROL

19 MEASURES.—Section 1304(b) of the National Flood In20 surance Act of 1968 (42 U.S.C. 4011(b)) is amended—

21 (1) in the matter preceding paragraph (1)—

22 (A) by striking ‘‘compliance’’ and inserting

23 ‘‘implementing measures that are consistent’’;

24 and
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1 (B) by inserting ‘‘by the community’’ after

2 ‘‘established’’;

3 (2) in paragraph (2), by striking ‘‘have flood

4 damage in which the cost of repairs equals or ex5 ceeds 50 percent of the value of the structure at the

6 time of the flood event; and’’ and inserting ‘‘are sub7 stantially damaged structures;’’

8 (3) in paragraph (3), by striking ‘‘compliance

9 with land use and control measures.’’ and inserting

10 ‘‘the implementation of such measures; and’’; and

11 (4) by inserting after paragraph (3) and before

12 the last undesignated paragraph the following:

13 ‘‘(4) properties for which an offer of mitigation

14 assistance is made under—

15 ‘‘(A) section 1366 (Flood Mitigation As16 sistance Program);

17 ‘‘(B) section 1368 (Repetitive Loss Pri18 ority Program and Individual Priority Property

19 Program);

20 ‘‘(C) the Hazard Mitigation Grant Pro21 gram authorized under section 404 of the Rob22 ert T. Stafford Disaster Assistance and Emer23 gency Relief Act (42 U.S.C. 5170c);

24 ‘‘(D) the Predisaster Hazard Mitigation

25 Program under section 203 of the Robert T.
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1 Stafford Disaster Assistance and Emergency

2 Relief Act (42 U.S.C. 5133); and

3 ‘‘(E) any programs authorized or for which

4 funds are appropriated to address any unmet

5 needs or for which supplemental funds are

6 made available.’’.

7 (b) DEFINITIONS.—Section 1370(a) of the National

8 Flood Insurance Act of 1968 (42 U.S.C. 4121(a)) is

9 amended—

10 (1) by striking paragraph (7) and inserting the

11 following:

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

13 a structure covered by a contract for flood insurance

14 that—

15 ‘‘(A) has incurred flood-related damage on

16 2 occasions, in which the cost of repair, on the

17 average, equaled or exceeded 25 percent of the

18 value of the structure at the time of each such

19 flood event; and

20 ‘‘(B) at the time of the second incidence of

21 flood-related damage, the contract for flood in22 surance contains increased cost of compliance

23 coverage.’’;

24 (2) in paragraph (13), by striking ‘‘and’’ at the

25 end;
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1 (3) in paragraph (14), by striking the period

2 and inserting ‘‘; and’’; and

3 (4) by adding at the end the following:

4 ‘‘(15) the term ‘substantially damaged struc5 ture’ means a structure covered by a contract for

6 flood insurance that has incurred damage for which

7 the cost of repair exceeds an amount specified in any

8 regulation promulgated by the Director, or by a

9 community ordinance, whichever is lower.’’.

10 SEC. 106. ACTUARIAL RATE PROPERTIES.

11 (a) IN GENERAL.—Section 1308 of the National

12 Flood Insurance Act of 1968 (42 U.S.C. 4015) is amended

13 by striking subsection (c) and inserting the following:

14 ‘‘(c) ACTUARIAL RATE PROPERTIES.—Subject only

15 to the limitations provided under paragraphs (1) and (2),

16 the chargeable rate shall not be less than the applicable

17 estimated risk premium rate for such area (or subdivision

18 thereof) under section 1307(a)(1) with respect to the fol19 lowing properties:

20 ‘‘(1) POST-FIRM PROPERTIES.—Any property

21 the construction or substantial improvement of

22 which the Director determines has been started after

23 December 31, 1974, or started after the effective

24 date of the initial rate map published by the Direc25 tor under paragraph (2) of section 1360 for the area
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1 in which such property is located, whichever is later,

2 except that the chargeable rate for properties under

3 this paragraph shall be subject to the limitation

4 under subsection (e).

5 ‘‘(2) CERTAIN LEASED COASTAL AND RIVER

6 PROPERTIES.—Any property leased from the Federal

7 Government (including residential and nonresidential

8 properties) that the Director determines is located

9 on the river-facing side of any dike, levee, or other

10 riverine flood control structure, or seaward of any

11 seawall or other coastal flood control structure.’’.

12 (b) INAPPLICABILITY OF ANNUAL LIMITATIONS ON

13 PREMIUM INCREASES.—Section 1308(e) of the National

14 Flood Insurance Act of 1968 (42 U.S.C. 4015(e)) is

15 amended by striking ‘‘Notwithstanding’’ and inserting

16 ‘‘Except with respect to properties described under para17 graph (2) or (3) of subsection (c), and notwithstanding’’.

18 SEC. 107. GEOSPATIAL DIGITAL FLOOD HAZARD DATA.

19 For the purposes of flood insurance and floodplain

20 management activities conducted pursuant to the National

21 Flood Insurance Program under the National Flood In22 surance Act of 1968 (42 U.S.C. 4001 et seq.), geospatial

23 digital flood hazard data distributed by the Federal Emer24 gency Management Agency, or its designee, or the printed

25 products derived from that data, are interchangeable and
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1 legally equivalent for the determination of the location of

2 1 in 100 year and 1 in 500 year flood planes, provided

3 that all other geospatial data shown on the printed prod4 uct meets or exceeds any accuracy standard promulgated

5 by the Federal Emergency Management Agency.

6 SEC. 108. REPLACEMENT OF MOBILE HOMES ON ORIGINAL

7 SITES.

8 Section 1315 of the National Flood Insurance Act of

9 1968 (42 U.S.C. 4022) is amended by adding at the end

10 the following:

11 ‘‘(c) REPLACEMENT OF MOBILE HOMES ON ORIGI12 NAL SITES.—

13 ‘‘(1) COMMUNITY PARTICIPATION.—The place14 ment of any mobile home on any site shall not affect

15 the eligibility of any community to participate in the

16 flood insurance program under this title and the

17 Flood Disaster Protection Act of 1973 (notwith18 standing that such placement may fail to comply

19 with any elevation or flood damage mitigation re20 quirements), if—

21 ‘‘(A) such mobile home was previously lo22 cated on such site;

23 ‘‘(B) such mobile home was relocated from

24 such site because of flooding that threatened or

25 affected such site; and
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1 ‘‘(C) such replacement is conducted not

2 later than the expiration of the 180-day period

3 that begins upon the subsidence (in the area of

4 such site) of the body of water that flooded to

5 a level considered lower than flood levels.

6 ‘‘(2) DEFINITION.—For purposes of this sub7 section, the term ‘mobile home’ has the meaning

8 given such term in the law of the State in which the

9 mobile home is located.’’.

10 SEC. 109. REITERATION OF FEMA RESPONSIBILITY TO MAP

11 MUDSLIDES.

12 As directed in section 1360(b) of the National Flood

13 Insurance Act of 1968 (42 U.S.C. 4101(b)), the Director

14 of the Federal Emergency Management Agency is again

15 directed to accelerate the identification of risk zones with16 in flood-prone and mudslide-prone areas, as provided by

17 subsection (a)(2) of such section 1360, in order to make

18 known the degree of hazard within each such zone at the

19 earliest possible date.

20 TITLE II—MISCELLANEOUS

21 PROVISIONS

22 SEC. 201. DEFINITIONS.

23 In this title, the following definitions shall apply:
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1 (1) DIRECTOR.—The term ‘‘Director’’ means

2 the Director of the Federal Emergency Management

3 Agency.

4 (2) FLOOD INSURANCE POLICY.—The term

5 ‘‘flood insurance policy’’ means a flood insurance

6 policy issued under the National Flood Insurance

7 Act of 1968 (42 U.S.C. et seq.).

8 (3) PROGRAM.—The term ‘‘Program’’ means

9 the National Flood Insurance Program established

10 under the National Flood Insurance Act of 1968 (42

11 U.S.C. 4001 et seq.).

12 SEC. 202. SUPPLEMENTAL FORMS.

13 (a) IN GENERAL.—Not later than 6 months after the

14 date of enactment of this Act, the Director shall develop

15 supplemental forms to be issued in conjunction with the

16 issuance of a flood insurance policy that set forth, in sim17 ple terms—

18 (1) the exact coverages being purchased by a

19 policyholder;

20 (2) any exclusions from coverage that apply to

21 the coverages purchased;

22 (3) an explanation, including illustrations, of

23 how lost items and damages will be valued under the

24 policy at the time of loss;
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1 (4) the number and dollar value of claims filed

2 under a flood insurance policy over the life of the

3 property, and the effect, under the National Flood

4 Insurance Act of 1968 (42 U.S.C. 4001 et seq.), of

5 the filing of any further claims under a flood insur6 ance policy with respect to that property; and

7 (5) any other information that the Director de8 termines will be helpful to policyholders in under9 standing flood insurance coverage.

10 (b) DISTRIBUTION.—The forms developed under sub11 section (a) shall be given to—

12 (1) all holders of a flood insurance policy at the

13 time of purchase and renewal; and

14 (2) insurance companies and agents that are

15 authorized to sell flood insurance policies.

16 SEC. 203. ACKNOWLEDGEMENT FORM.

17 (a) IN GENERAL.—Not later than 6 months after the

18 date of enactment of this Act, the Director shall develop

19 an acknowledgement form to be signed by the purchaser

20 of a flood insurance policy that contains—

21 (1) an acknowledgement that the purchaser has

22 received a copy of the standard flood insurance pol23 icy, and any forms developed under section 202; and

24 (2) an acknowledgement that the purchaser has

25 been told that the contents of a property or dwelling
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1 are not covered under the terms of the standard

2 flood insurance policy, and that the policyholder has

3 the option to purchase additional coverage for such

4 contents.

5 (b) DISTRIBUTION.—Copies of an acknowledgement

6 form executed under subsection (a) shall be made available

7 to the purchaser and the Director.

8 SEC. 204. FLOOD INSURANCE CLAIMS HANDBOOK.

9 (a) IN GENERAL.—Not later than 6 months after the

10 date of enactment of this Act, the Director shall develop

11 a flood insurance claims handbook that contains—

12 (1) a description of the procedures to be fol13 lowed to file a claim under the Program, including

14 how to pursue a claim to completion;

15 (2) how to file supplementary claims, proof of

16 loss, and any other information relating to the filing

17 of claims under the Program; and

18 (3) detailed information regarding the appeals

19 process established under section 205.

20 (b) DISTRIBUTION.—The handbook developed under

21 subsection (a) shall be made available to—

22 (1) each insurance company and agent author23 ized to sell flood insurance policies; and
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1 (2) each purchaser, at the time of purchase and

2 renewal, of a flood insurance policy, and at the time

3 of any flood loss sustained by such purchaser.

4 SEC. 205. APPEAL OF DECISIONS RELATING TO FLOOD IN5 SURANCE COVERAGE.

6 Not later than 6 months after the date of enactment

7 of this Act, the Director shall, by regulation, establish an

8 appeals process through which holders of a flood insurance

9 policy may appeal the decisions, with respect to claims,

10 proofs of loss, and loss estimates relating to such flood

11 insurance policy, of—

12 (1) any insurance agent or adjuster, or insur13 ance company; or

14 (2) any employee or contractor of the Federal

15 Emergency Management Agency.

16 SEC. 206. STUDY AND REPORT ON USE OF COST COMPLI17 ANCE COVERAGE.

18 Not later than 1 year after the date of enactment

19 of this Act, the Director of the Federal Emergency Man20 agement Agency shall submit to Congress a report that

21 sets forth—

22 (1) the use of cost of compliance coverage

23 under section 1304(b) of the National Flood Insur24 ance Act of 1968 (42 U.S.C. 4011(b)) in connection

25 with flood insurance policies;
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1 (2) any barriers to policyholders using the

2 funds provided by cost of compliance coverage under

3 that section 1304(b) under a flood insurance policy,

4 and recommendations to address those barriers; and

5 (3) the steps that the Federal Emergency Man6 agement Agency has taken to ensure that funds paid

7 for cost of compliance coverage under that section

8 1304(b) are being used to lessen the burdens on all

9 homeowners and the Program.

10 SEC. 207. MINIMUM TRAINING AND EDUCATION REQUIRE11 MENTS.

12 The Director of the Federal Emergency Management

13 Agency shall, in cooperation with the insurance industry,

14 State insurance regulators, and other interested parties—

15 (1) establish minimum training and education

16 requirements for all insurance agents who sell flood

17 insurance policies; and

18 (2) not later than 6 months after the date of

19 enactment of this Act, publish these requirements in

20 the Federal Register, and inform insurance compa21 nies and agents of the requirements.

22 SEC. 208. GAO STUDY AND REPORT.

23 (a) STUDY.—The Comptroller General of the United

24 States shall conduct a study of—
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1 (1) the adequacy of the scope of coverage pro2 vided under flood insurance policies in meeting the

3 intended goal of Congress that flood victims be re4 stored to their pre-flood conditions, and any rec5 ommendations to ensure that goal is being met;

6 (2) the adequacy of payments to flood victims

7 under flood insurance policies; and

8 (3) the practices of the Federal Emergency

9 Management Agency and insurance adjusters in esti10 mating losses incurred during a flood, and how such

11 practices affect the adequacy of payments to flood

12 victims.

13 (b) REPORT.—Not later than 1 year after the date

14 of enactment of this Act, the Comptroller General shall

15 submit to Congress a report regarding the results of the

16 study under subsection (a).

17 SEC. 209. PROSPECTIVE PAYMENT OF FLOOD INSURANCE

18 PREMIUMS.

19 Section 1308 of the National Flood Insurance Act of

20 1968 (42 U.S.C. 4015) is amended by adding at the end

21 the following:

22 ‘‘(f) ADJUSTMENT OF PREMIUM.—Notwithstanding

23 any other provision of law, if the Director determines that

24 the holder of a flood insurance policy issued under this

25 Act is paying a lower premium than is required under this
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1 section due to an error in the flood plain determination,

2 the Director may only prospectively charge the higher pre3 mium rate.’’.

4 SEC. 210. REPORT ON CHANGES TO FEE SCHEDULE OR FEE

5 PAYMENT ARRANGEMENTS.

6 Not later than 3 months after the date of enactment

7 of this Act, the Director shall submit a report on any

8 changes or modifications made to the fee schedule or fee

9 payment arrangements between the Federal Emergency

10 Management Agency and insurance adjusters who provide

11 services with respect to flood insurance policies to—

12 (1) the Committee on Banking, Housing, and

13 Urban Affairs of the Senate; and

14 (2) the Committee on Financial Services of the

15 House of Representatives.

Passed the Senate June 15, 2004.

Attest:

Secretary.
108TH CONGRESS

2D SESSION S. 2238

AN ACT

To amend the National Flood Insurance Act of

been made.petitive flood insurance claim payments have1968 to reduce losses to properties for which re-