II 

Calendar No. 513

108TH CONGRESS 

2D SESSION S. 2238

[Report No. 108–262] 

To amend the National Flood Insurance Act of 1968 to reduce losses to 

properties for which repetitive flood insurance claim payments have been 

made. 

IN THE SENATE OF THE UNITED STATES 

MARCH 25, 2004

Mr. BUNNING (for himself, Mr. SHELBY, Mr. SARBANES, Mr. SCHUMER, Mrs. 

DOLE, Mr. HAGEL, Ms. MIKULSKI, Mr. MILLER, Mr. ALLARD, and Mr. 

JOHNSON) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

MAY 13, 2004

Reported by Mr. SHELBY, with amendments 

[Omit the part struck through and insert the part printed in italic] 

A BILL

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,
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

3 ‘‘Flood Insurance Reform Act of 2004’’. 

4 (b) TABLE OF CONTENTS.—The table of contents for 

5 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.

6 SEC. 2. CONGRESSIONAL FINDINGS. 

7 The Congress finds that—

8 (1) the national flood insurance program—

9 (A) identifies the flood risk; 

10 (B) provides flood risk information to the 

11 public; 
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1 (C) encourages State and local govern2 ments to make appropriate land use adjust3 ments to constrict the development of land 

4 which is exposed to flood damage and minimize 

5 damage caused by flood losses; and 

6 (D) makes flood insurance available on a 

7 nationwide basis that would otherwise not be 

8 available, to accelerate recovery from floods, 

9 mitigate future losses, save lives, and reduce 

10 the personal and national costs of flood disas11 ters; 

12 (2) the national flood insurance program in13 sures approximately 4,400,000 policyholders; 

14 (3) approximately 48,000 properties currently 

15 insured under the program have experienced, within 

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

17 such loss exceeds the amount $1,000; 

18 (4) approximately 10,000 of these repetitive19 loss properties have experienced either 2 or 3 losses 

20 that cumulatively exceed building value or 4 or more 

21 losses, each exceeding $1,000; 

22 (5) repetitive-loss properties constitute a signifi23 cant drain on the resources of the national flood in24 surance program, costing about $200,000,000 annu25 ally; 
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1 (6) repetitive-loss properties comprise approxi2 mately 1 percent of currently insured properties but 

3 are expected to account for 25 to 30 percent of 

4 claims losses; 

5 (7) the vast majority of repetitive-loss prop6 erties were built before local community implementa7 tion of floodplain management standards under the 

8 program and thus are eligible for subsidized flood in9 surance; 

10 (8) while some property owners take advantage 

11 of the program allowing subsidized flood insurance 

12 without requiring mitigation action, others are 

13 trapped in a vicious cycle of suffering flooding, then 

14 repairing flood damage, then suffering flooding, 

15 without the means to mitigate losses or move out of 

16 harm’s way; 

17 (9) mitigation of repetitive-loss properties 

18 through buyouts, elevations, relocations, or flood19 proofing will produce savings for policyholders under 

20 the program and for Federal taxpayers through re21 duced flood insurance losses and reduced Federal 

22 disaster assistance; 

23 (10) a strategy of making mitigation offers 

24 aimed at high-priority repetitive-loss properties and 

25 shifting more of the burden of recovery costs to 
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1 property owners who choose to remain vulnerable to 

2 repetitive flood damage can encourage property own3 ers to take appropriate actions that reduce loss of 

4 life and property damage and benefit the financial 

5 soundness of the program; 

6 (11) the method for addressing repetitive-loss 

7 properties should be flexible enough to take into con8 sideration legitimate circumstances that may prevent 

9 an owner from taking a mitigation action; and 

10 (12) focusing the mitigation and buy-out of re11 petitive loss properties upon communities and prop12 erty owners that choose to voluntarily participate in 

13 a mitigation and buy-out program will maximize the 

14 benefits of such a program, while minimizing any 

15 adverse impact on communities and property owners.

16 TITLE I—AMENDMENTS TO 

17 FLOOD INSURANCE ACT OF 1968

18 SEC. 101. EXTENSION OF PROGRAM AND CONSOLIDATION 

19 OF AUTHORIZATIONS. 

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

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

22 1968 (42 U.S.C. 4016(a)), is amended by striking 

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

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

25 and’’. 
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1 (b) AUTHORITY FOR CONTRACTS.—Section 1319 of 

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

3 4026), is amended by striking ‘‘after’’ and all that follows 

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

5 (c) EMERGENCY IMPLEMENTATION.—Section 

6 1336(a) of the National Flood Insurance Act of 1968 (42 

7 U.S.C. 4056(a)), is amended by striking ‘‘during the pe8 riod’’ and all that follows through ‘‘in accordance’’ and 

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

10 in section 1319, in accordance’’. 

11 (d) AUTHORIZATION OF APPROPRIATIONS FOR STUD12 IES.—Section 1376(c) of the National Flood Insurance 

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

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

15 date specified in section 1319, for studies under this 

16 title.’’. 

17 SEC. 102. ESTABLISHMENT OF PILOT PROGRAM FOR MITI18 GATION OF SEVERE REPETITIVE LOSS PROP19 ERTIES. 

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

21 Act of 1968 is amended by inserting after section 1361 

22 (42 U.S.C. 4102) the following: 
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1 ‘‘SEC. 1361A. PILOT PROGRAM FOR MITIGATION OF SEVERE 

2 REPETITIVE LOSS PROPERTIES. 

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

4 available for use under this section, the Director may, sub5 ject to the limitations of this section, provide financial as6 sistance to States and communities for taking actions with 

7 respect to severe repetitive loss properties (as such term 

8 is defined in subsection (b)) to mitigate flood damage to 

9 such properties and losses to the National Flood Insur10 ance Fund from such properties. 

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

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

13 property’ has the following meaning: 

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

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

16 term means a property that—

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

18 insurance made available under this title; and 

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

20 ‘‘(i) for which 3 or more separate 

21 claims payments have been made under 

22 flood insurance coverage under this title, 

23 with the amount of each such claim ex24 ceeding $3,000, and with the cumulative 

25 amount of such claims payments exceeding 

26 $15,000; or 
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1 ‘‘(ii) for which at least 2 separate 

2 claims payments have been made under 

3 such coverage, with the cumulative amount 

4 of such claims exceeding the value of the 

5 property. 

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

7 of a property consisting of 5 or more residences, 

8 such term shall have such meaning as the Director 

9 shall by regulation provide. 

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

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

12 only for the following activities: 

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

14 mitigation activities that reduce flood damages to se15 vere repetitive loss properties, including elevation, 

16 relocation, demolition, and floodproofing of struc17 tures, and minor physical localized flood control 

18 projects, and the demolition and rebuilding of prop19 erties to at least 1 foot above Base Flood Elevation 

20 or greater, if required by any local ordinance. 

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

22 loss properties, subject to subsection (f). 

23 ‘‘(d) MATCHING REQUIREMENT.—

24 ‘‘(1) IN GENERAL.—Except as provided in para25 graph (2), in any 1-year period the Director may not 
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1 provide assistance under this section to a State or 

2 community in an amount exceeding 3 times the 

3 amount that the State or community certifies, as the 

4 Director shall require, that the State or community 

5 will contribute from non-Federal funds for carrying 

6 out the eligible activities to be funded with such as7 sistance amounts. 

8 ‘‘(2) REDUCED COMMUNITY MATCH.—With re9 spect to any 1-year period in which assistance is 

10 made available under this section, the Director may 

11 adjust the contribution required under paragraph 

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

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

14 of the activities for each severe repetitive loss prop15 erty for which grant amounts are provided if, for 

16 such year—

17 ‘‘(A) the State has an approved State miti18 gation plan meeting the requirements for haz19 ard mitigation planning under section 322 of 

20 the Robert T. Stafford Disaster Relief and 

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

22 that specifies how the State intends to reduce 

23 the number of severe repetitive loss properties; 

24 and 
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1 ‘‘(B) the Director determines, after con2 sultation with the State, that the State has 

3 taken actions to reduce the number of such 

4 properties. 

5 ‘‘(3) NON-FEDERAL FUNDS.—For purposes of 

6 this subsection, the term ‘non-Federal funds’ in7 cludes State or local agency funds, in-kind contribu8 tions, any salary paid to staff to carry out the eligi9 ble activities of the recipient, the value of the time 

10 and services contributed by volunteers to carry out

11 such activities (at a rate determined by the Direc12 tor), and the value of any donated material or build13 ing and the value of any lease on a building. 

14 ‘‘(e) STANDARDS FOR MITIGATION OFFERS.—The 

15 program under this section for providing assistance for eli16 gible activities for severe repetitive loss properties shall be 

17 subject to the following limitations: 

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

19 for which to provide assistance for eligible activities 

20 under subsection (c), the Director shall provide as21 sistance for properties in the order that will result 

22 in the greatest amount of savings to the National 

23 Flood Insurance Fund in the shortest period of time. 

24 ‘‘(2) OFFERS.—The Director shall provide as25 sistance in a manner that permits States and com-
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1 munities to make offers to owners of severe repet2 itive loss properties to take eligible activities under 

3 subsection (c) as soon as practicable.

4 ‘‘(3) NOTICE.—Upon making an offer to pro5 vide assistance with respect to a property for any eli6 gible activity under subsection (c), the State or com7 munity shall notify each holder of a recorded inter8 est on the property of such offer and activity. 

9 ‘‘(f) PURCHASE OFFERS.—A State or community 

10 may take action under subsection (c)(2) to purchase a se11 vere repetitive loss property only if the following require12 ments are met: 

13 ‘‘(1) USE OF PROPERTY.—The State or com14 munity enters into an agreement with the Director 

15 that provides assurances that the property pur16 chased will be used in a manner that is consistent 

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

18 Robert T. Stafford Disaster Relief and Emergency 

19 Assistance Act (42 U.S.C. 5170c(b)(2)(B)) for prop20 erties acquired, accepted, or from which a structure 

21 will be removed pursuant to a project provided prop22 erty acquisition and relocation assistance under such 

23 section 404(b).

24 ‘‘(2) OFFERS.—The Director shall provide as25 sistance in a manner that permits States and com-
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1 munities to make offers to owners of severe repet2 itive loss properties and of associated land to engage 

3 in eligible activities as soon as possible. 

4 ‘‘(3) PURCHASE PRICE.—The amount of pur5 chase offer is not less than the greatest of—

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

7 price of the property, when purchased by the 

8 holder of the current policy of flood insurance 

9 under this title;

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

11 the offer to purchase is made, under any loan 

12 secured by a recorded interest on the property; 

13 and 

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

15 value of the property immediately before the 

16 most recent flood event affecting the property, 

17 or an amount equal to the current fair market 

18 value of the property.

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

20 purchase offer made under paragraph (2) is less than 

21 the cost of the homeowner-occupant to purchase a 

22 comparable replacement dwelling outside the flood 

23 hazard area in the same community, the Director 

24 shall make available an additional relocation pay-
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1 ment to the homeowner-occupant to apply to the dif2 ference.

3 ‘‘(g) INCREASED PREMIUMS IN CASES OF REFUSAL

4 TO MITIGATE.—

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

6 owner of a severe repetitive loss property refuses an 

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

8 subsection (c) with respect to such property, the Di9 rector shall—

10 ‘‘(A) notify each holder of a recorded inter11 est on the property of such refusal; and 

12 ‘‘(B) notwithstanding subsections (a) 

13 through (c) of section 1308, thereafter the 

14 chargeable premium rate with respect to the 

15 property shall be the amount equal to 150 per16 cent of the chargeable rate for the property at 

17 the time that the offer was made, as adjusted 

18 by any other premium adjustments otherwise 

19 applicable to the property and any subsequent 

20 increases pursuant to paragraph (2) and sub21 ject to the limitation under paragraph (3). 

22 ‘‘(2) INCREASED PREMIUMS UPON SUBSEQUENT

23 FLOOD DAMAGE.—Notwithstanding subsections (a) 

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

25 repetitive loss property does not accept an offer to 
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1 take action under paragraph (1) or (2) of subsection 

2 (c) with respect to such property and a claim pay3 ment exceeding $1,500 is made under flood insur4 ance coverage under this title for damage to the 

5 property caused by a flood event occurring after 

6 such offer is made, thereafter the chargeable pre7 mium rate with respect to the property shall be the 

8 amount equal to 150 percent of the chargeable rate 

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

10 adjusted by any other premium adjustments other11 wise applicable to the property and any subsequent 

12 increases pursuant to this paragraph and subject to 

13 the limitation under paragraph (3). 

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

15 In no case may the chargeable premium rate for a 

16 severe repetitive loss property be increased pursuant 

17 to this subsection to an amount exceeding the appli18 cable estimated risk premium rate for the area (or 

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

20 ‘‘(4) TREATMENT OF DEDUCTIBLES.—Any in21 crease in chargeable premium rates required under 

22 this subsection for a severe repetitive loss property 

23 may be carried out, to the extent appropriate, as de24 termined by the Director, by adjusting any deduct-
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1 ible charged in connection with flood insurance cov2 erage under this title for the property. 

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

4 each renewal or modification of any flood insurance 

5 coverage under this title for a severe repetitive loss 

6 property, the Director shall notify the owner that 

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

8 open. 

9 ‘‘(6) APPEALS.—

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

11 repetitive loss property may appeal a deter12 mination of the Director to take action under 

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

14 property, based only upon the following 

15 grounds: 

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

17 owner of the property will not be able to 

18 purchase a replacement primary residence 

19 of comparable value and that is function20 ally equivalent.

21 ‘‘(ii) Based on independent informa22 tion, such as contractor estimates or ap23 praisals, the property owner believes that 

24 the price offered for purchasing the prop25 erty is not an accurate estimation of the 
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1 value of the property, or the amount of 

2 Federal funds offered for mitigation activi3 ties, when combined with funds from non4 Federal sources, will not cover the actual 

5 cost of mitigation.

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

7 preservation or maintenance of any pre8 historic or historic district, site, building, 

9 structure, or object included in, or eligible 

10 for inclusion in, the National Register of 

11 historic places will be interfered with, im12 paired, or disrupted. 

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

14 flood insurance claims described in sub15 section (b)(2) for the property resulted 

16 from significant actions by a third party in 

17 violation of Federal, State, or local law, or18 dinance, or regulation. 

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

20 owner relied upon flood insurance rate 

21 maps of the Federal Emergency Manage22 ment Agency that were current at the time 

23 and did not indicate that the property was 

24 located in an area having special flood haz25 ards. 
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1 ‘‘(B) PROCEDURE.—An appeal under this 

2 paragraph of a determination of the Director 

3 shall be made by filing, with the Director, a re4 quest for an appeal within 90 days after receiv5 ing notice of such determination. Upon receiv6 ing the request, the Director shall select, from 

7 a list of independent third parties compiled by 

8 the Director for such purpose, a party to hear 

9 such appeal. Within 90 days after filing of the 

10 request for the appeal, such third party shall 

11 review the determination of the Director and 

12 shall set aside such determination if the third 

13 party determines that the grounds under sub14 paragraph (A) exist. During the pendency of an 

15 appeal under this paragraph, the Director shall 

16 stay the applicability of the rates established 

17 pursuant to paragraph (1)(B) or (2), as appli18 cable. 

19 ‘‘(C) EFFECT OF FINAL DETERMINA20 TION.—In an appeal under this paragraph—

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

22 that the grounds under subparagraph (A) 

23 exist, the third party hearing such appeal 

24 shall make a determination of how much to 

25 reduce the chargeable risk premium rate 
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1 for flood insurance coverage for the prop2 erty involved in the appeal from the 

3 amount required under paragraph (1)(B) 

4 or (2) and the Director shall promptly re5 duce the chargeable risk premium rate for 

6 such property by such amount; and 

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

8 that the grounds under subparagraph (A) 

9 do not exist, the Director shall promptly 

10 increase the chargeable risk premium rate 

11 for such property to the amount estab12 lished pursuant to paragraph (1)(B) or 

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

14 the property owner the amount necessary 

15 to cover the stay of the applicability of 

16 such increased rates during the pendency 

17 of the appeal.

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

19 an appeal under this paragraph is compensated 

20 for such service, the costs of such compensation 

21 shall be borne—

22 ‘‘(i) by the owner of the property re23 questing the appeal, if the final determina24 tion in the appeal is that the grounds 

25 under subparagraph (A) do not exist; and 
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1 ‘‘(ii) by the National Flood Insurance 

2 Fund, if such final determination is that 

3 the grounds under subparagraph (A) do 

4 exist. 

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

6 after the date of the enactment of the Flood In7 surance Reform Act of 2004, the Director shall 

8 submit a report describing the rules, proce9 dures, and administration for appeals under 

10 this paragraph to—

11 ‘‘(i) the Committee on Banking, 

12 Housing, and Urban Affairs of the Senate; 

13 and 

14 ‘‘(ii) the Committee on Financial 

15 Services of the House of Representatives. 

16 ‘‘(h) DISCRETIONARY ACTIONS IN CASES OF FRAUD17 ULENT CLAIMS.—If the Director determines that a fraud18 ulent claim was made under flood insurance coverage 

19 under this title for a severe repetitive loss property, the 

20 Director may—

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

22 such policyholder of any new flood insurance cov23 erage under this title for the property; or 

24 ‘‘(2) refuse to renew the policy with such policy25 holder upon expiration and deny the provision of any 
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1 new flood insurance coverage under this title to such 

2 policyholder for the property. 

3 ‘‘(i) FUNDING.—

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

5 1310(a)(8), the Director may use amounts from the 

6 National Flood Insurance Fund to provide assist7 ance under this section in each of fiscal years 2004, 

8 2005, 2006, 2007, and 2008, except that the 

9 amount so used in each such fiscal year may not ex10 ceed $40,000,000 and shall remain available until 

11 expended. Notwithstanding any other provision of 

12 this title, amounts made available pursuant to this 

13 subsection shall not be subject to offsetting collec14 tions through premium rates for flood insurance cov15 erage under this title. 

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

17 amounts made available under this subsection, the 

18 Director may use up to 5 percent for expenses asso19 ciated with the administration of section 1361A.

20 ‘‘(j) TERMINATION.—The Director may not provide 

21 assistance under this section to any State or community 

22 after September 30, 2008.’’. 

23 (b) AVAILABILITY OF NATIONAL FLOOD INSURANCE

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

25 Insurance Act of 1968 (42 U.S.C. 4017(a)) is amended—
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1 (1) in paragraph (7), by striking ‘‘and’’ at the 

2 end; and

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

4 following: 

5 ‘‘(8) for financial assistance under section 

6 1361A to States and communities for taking actions 

7 under such section with respect to severe repetitive 

8 loss properties, but only to the extent provided in 

9 section 1361A(i); and’’. 

10 SEC. 103. AMENDMENTS TO EXISTING FLOOD MITIGATION 

11 ASSISTANCE PROGRAM. 

12 (a) STANDARD FOR APPROVAL OF MITIGATION

13 PLANS.—Section 1366(e)(3) of the National Flood Insur14 ance Act of 1968 (42 U.S.C. 4104c) is amended by adding 

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

16 approve only mitigation plans that give priority for fund17 ing to such properties, or to such subsets of properties, 

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

19 Fund.’’. 

20 (b) PRIORITY FOR MITIGATION ASSISTANCE.—Sec21 tion 1366(e) of the National Flood Insurance Act of 1968 

22 (42 U.S.C. 4104c) is amended by striking paragraph (4) 

23 and inserting the following: 

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

25 In providing grants under this subsection for mitiga-
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1 tion activities, the Director shall give first priority 

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

3 such properties as the Director may establish, that 

4 the Director determines are in the best interests of 

5 the National Flood Insurance Fund and for which 

6 matching amounts under subsection (f) are avail7 able.’’. 

8 (c) COORDINATION WITH STATES AND COMMU9 NITIES.—Section 1366 of the National Flood Insurance 

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

11 the end the following: 

12 ‘‘(m) COORDINATION WITH STATES AND COMMU13 NITIES.—The Director shall, in consultation and coordina14 tion with States and communities take such actions as are 

15 appropriate to encourage and improve participation in the 

16 national flood insurance program of owners of properties, 

17 including owners of properties that are not located in 

18 areas having special flood hazards but are located within 

19 the 100-year floodplain (the 100-year floodplain), but are 

20 located within flood prone areas.’’. 

21 (d) FUNDING.—Section 1367(b) of the National 

22 Flood Insurance Act of 1968 (42 U.S.C. 4104d(b)) is 

23 amended by striking paragraph (1) and inserting the fol24 lowing: 
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1 ‘‘(1) in each fiscal year, amounts from the Na2 tional Flood Insurance Fund not exceeding 

3 $40,000,000, to remain available until expended;’’. 

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

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

6 4104c(g)), is amended—

7 (2) by redesignating paragraph (2) as para8 graph (3); and 

9 (3) by inserting after paragraph (1) the fol10 lowing: 

11 ‘‘(2) REDUCED COMMUNITY MATCH.—With re12 spect to any 1-year period in which assistance is 

13 made available under this section, the Director may 

14 adjust the contribution required under paragraph 

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

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

17 of the activities for each severe repetitive loss prop18 erty for which grant amounts are provided if, for 

19 such year—

20 ‘‘(A) the State has an approved State miti21 gation plan meeting the requirements for haz22 ard mitigation planning under section 322 of 

23 the Robert T. Stafford Disaster Relief and 

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

25 that specifies how the State intends to reduce 
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1 the number of severe repetitive loss properties; 

2 and 

3 ‘‘(B) the Director determines, after con4 sultation with the State, that the State has 

5 taken actions to reduce the number of such 

6 properties.’’. 

7 (f) NATIONAL FLOOD MITIGATION FUND.—Section 

8 1366(b)(2) of the National Flood Insurance Act of 1968 

9 (42 U.S.C. 4104c(b)(2)), is amended by striking 

10 ‘‘$1,500,000’’ and inserting ‘‘7.5 percent of the available 

11 funds under this section’’. 

12 SEC. 104. FEMA AUTHORITY TO FUND MITIGATION ACTIVI13 TIES FOR INDIVIDUAL REPETITIVE CLAIMS 

14 PROPERTIES. 

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

16 Insurance Act of 1968 (42 U.S.C. 4011 et seq.) is amend17 ed by adding at the end the following:

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

19 PROPERTIES. 

20 ‘‘(a) IN GENERAL.—The Director may provide fund21 ing for mitigation actions that reduce flood damages to 

22 individual properties for which 1 or more claim payments 

23 for losses have been made under flood insurance coverage 

24 under this title, but only if the Director determines that—
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1 ‘‘(1) such activities are in the best interest of 

2 the National Flood Insurance Fund; and 

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

4 program under section 1366 because—

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

6 are not being met by the State or community 

7 in which the property is located; or 

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

9 have the capacity to manage such activities. 

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

11 determining the properties for which funding is to be pro12 vided under this section, the Director shall consult with 

13 the States in which such properties are located and pro14 vide assistance for properties in the order that will result 

15 in the greatest amount of savings to the National Flood 

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

17 (b) AVAILABILITY OF NATIONAL FLOOD INSURANCE

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

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

20 by adding at the end the following: 

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

22 any fiscal year, for mitigation actions under section

23 1323, except that, notwithstanding any other provi24 sion of this title, amounts made available pursuant 

25 to this paragraph shall not be subject to offsetting 
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1 collections through premium rates for flood insur2 ance coverage under this title.’’.

3 SEC. 105. AMENDMENTS TO ADDITIONAL COVERAGE FOR 

4 COMPLIANCE WITH LAND USE AND CONTROL 

5 MEASURES. 

6 (a) COMPLIANCE WITH LAND USE AND CONTROL

7 MEASURES.—Section 1304(b) of the National Flood In8 surance Act of 1968 (42 U.S.C. 4011(b)) is amended—

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

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

11 ‘‘implementing measures that are consistent’’; 

12 and 

13 (B) by inserting ‘‘by the community’’ after 

14 ‘‘established’’; 

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

16 damage in which the cost of repairs equals or ex17 ceeds 50 percent of the value of the structure at the 

18 time of the flood event; and’’ and inserting ‘‘are sub19 stantially damaged structures;’’

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

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

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

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

24 the last undesignated paragraph the following: 
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1 ‘‘(4) properties for which an offer of mitigation 

2 assistance is made under—

3 ‘‘(A) section 1366 (Flood Mitigation As4 sistance Program); 

5 ‘‘(B) section 1368 (Repetitive Loss Pri6 ority Program and Individual Priority Property 

7 Program); 

8 ‘‘(C) the Hazard Mitigation Grant Pro9 gram authorized under section 404 of the Rob10 ert T. Stafford Disaster Assistance and Emer11 gency Relief Act (42 U.S.C. 5170c); 

12 ‘‘(D) the Predisaster Hazard Mitigation 

13 Program under section 203 of the Robert T. 

14 Stafford Disaster Assistance and Emergency 

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

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

17 funds are appropriated to address any unmet 

18 needs or for which supplemental funds are 

19 made available.’’. 

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

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

22 amended—

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

24 following: 
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1 ‘‘(7) the term ‘repetitive loss structure’ means 

2 a structure covered by a contract for flood insurance 

3 that—

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

5 2 occasions, in which the cost of repair, on the 

6 average, equaled or exceeded 25 percent of the 

7 value of the structure at the time of each such 

8 flood event; and 

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

10 flood-related damage, the contract for flood in11 surance contains increased cost of compliance 

12 coverage.’’; 

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

14 end; 

15 (3) in paragraph (14), by striking the period 

16 and inserting ‘‘; and’’; and 

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

18 ‘‘(15) the term ‘substantially damaged struc19 ture’ means a structure covered by a contract for 

20 flood insurance that has incurred damage for which 

21 the cost of repair exceeds an amount specified in any 

22 regulation promulgated by the Director, or by a 

23 community ordinance, whichever is lower.’’. 
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1 SEC. 106. ACTUARIAL RATE PROPERTIES. 

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

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

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

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

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

7 the chargeable rate shall not be less than the applicable 

8 estimated risk premium rate for such area (or subdivision 

9 thereof) under section 1307(a)(1) with respect to the fol10 lowing properties: 

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

12 the construction or substantial improvement of 

13 which the Director determines has been started after 

14 December 31, 1974, or started after the effective 

15 date of the initial rate map published by the Direc16 tor under paragraph (2) of section 1360 for the area 

17 in which such property is located, whichever is later, 

18 except that the chargeable rate for properties under 

19 this paragraph shall be subject to the limitation 

20 under subsection (e). 

21 ‘‘(2) CERTAIN LEASED COASTAL AND RIVER

22 PROPERTIES.—Any property leased from the Federal 

23 Government (including residential and nonresidential 

24 properties) that the Director determines is located 

25 on the river-facing side of any dike, levee, or other 
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1 riverine flood control structure, or seaward of any 

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

3 (b) INAPPLICABILITY OF ANNUAL LIMITATIONS ON

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

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

6 amended by striking ‘‘Notwithstanding’’ and inserting 

7 ‘‘Except with respect to properties described under para8 graph (2) or (3) of subsection (c), and notwithstanding’’. 

9 SEC. 107. GEOSPATIAL DIGITAL FLOOD HAZARD DATA. 

10 For the purposes of flood insurance and floodplain 

11 management activities conducted pursuant to the National 

12 Flood Insurance Program under the National Flood In13 surance Act of 1968 (42 U.S.C. 4001 et seq.), geospatial 

14 digital flood hazard data distributed by the Federal Emer15 gency Management Agency, or its designee, or the printed 

16 products derived from that data, are interchangeable and 

17 legally equivalent for the determination of the location of 

18 1 in 100 year and 1 in 500 year flood planes, provided 

19 that all other geospatial data shown on the printed prod20 uct meets or exceeds any accuracy standard promulgated 

21 by the Federal Emergency Management Agency.
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1 SEC. 108. REPLACEMENT OF MOBILE HOMES ON ORIGINAL 

2 SITES. 

3 Section 1315 of the National Flood Insurance Act of 

4 1968 (42 U.S.C. 4022) is amended by adding at the end 

5 the following: 

6 ‘‘(c) REPLACEMENT OF MOBILE HOMES ON ORIGI7 NAL SITES.—

8 ‘‘(1) COMMUNITY PARTICIPATION.—The place9 ment of any mobile home on any site shall not affect 

10 the eligibility of any community to participate in the

11 flood insurance program under this title and the 

12 Flood Disaster Protection Act of 1973 (notwith13 standing that such placement may fail to comply 

14 with any elevation or flood damage mitigation re15 quirements), if—

16 ‘‘(A) such mobile home was previously lo17 cated on such site; 

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

19 such site because of flooding that threatened or 

20 affected such site; and 

21 ‘‘(C) such replacement is conducted not 

22 later than the expiration of the 180-day period 

23 that begins upon the subsidence (in the area of 

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

25 a level considered lower than flood levels. 
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1 ‘‘(2) DEFINITION.—For purposes of this sub2 section, the term ‘mobile home’ has the meaning 

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

4 mobile home is located.’’.

5 SEC. 109. REITERATION OF FEMA RESPONSIBILITY TO MAP 

6 MUDSLIDES. 

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

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

9 of the Federal Emergency Management Agency is again 

10 directed to accelerate the identification of risk zones with11 in flood-prone and mudslide-prone areas, as provided by 

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

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

14 earliest possible date.

15 TITLE II—MISCELLANEOUS 

16 PROVISIONS 

17 SEC. 201. DEFINITIONS. 

18 In this title, the following definitions shall apply: 

19 (1) DIRECTOR.—The term ‘‘Director’’ means 

20 the Director of the Federal Emergency Management 

21 Agency. 

22 (2) FLOOD INSURANCE POLICY.—The term 

23 ‘‘flood insurance policy’’ means a flood insurance 

24 policy issued under the National Flood Insurance 

25 Act of 1968 (42 U.S.C. et seq.). 
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1 (3) PROGRAM.—The term ‘‘Program’’ means 

2 the National Flood Insurance Program established 

3 under the National Flood Insurance Act of 1968 (42 

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

5 SEC. 202. SUPPLEMENTAL FORMS. 

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

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

8 supplemental forms to be issued in conjunction with the 

9 issuance of a flood insurance policy that set forth, in sim10 ple terms—

11 (1) the exact coverages being purchased by a 

12 policyholder; 

13 (2) any exclusions from coverage that apply to 

14 the coverages purchased; 

15 (3) an explanation, including illustrations, of 

16 how lost items and damages will be valued under the 

17 policy at the time of loss; 

18 (4) the number and dollar value of claims filed 

19 under a flood insurance policy over the life of the 

20 property, and the effect, under the National Flood 

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

22 the filing of any further claims under a flood insur23 ance policy with respect to that property; and 
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•S 2238 RS 

1 (5) any other information that the Director de2 termines will be helpful to policyholders in under3 standing flood insurance coverage. 

4 (b) DISTRIBUTION.—The forms developed under sub5 section (a) shall be given to—

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

7 time of purchase and renewal; and 

8 (2) insurance companies and agents that are 

9 authorized to sell flood insurance policies. 

10 SEC. 203. ACKNOWLEDGEMENT FORM. 

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

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

13 an acknowledgement form to be signed by the purchaser 

14 of a flood insurance policy that contains—

15 (1) an acknowledgement that the purchaser has 

16 received a copy of the standard flood insurance pol17 icy, and any forms developed under section 202; and 

18 (2) an acknowledgement that the purchaser has 

19 been told that the contents of a property or dwelling 

20 are not covered under the terms of the standard 

21 flood insurance policy, and that the policyholder has 

22 the option to purchase additional coverage for such 

23 contents. 
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1 (b) DISTRIBUTION.—Copies of an acknowledgement 

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

3 to the purchaser and the Director. 

4 SEC. 204. FLOOD INSURANCE CLAIMS HANDBOOK. 

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

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

7 a flood insurance claims handbook that contains—

8 (1) a description of the procedures to be fol9 lowed to file a claim under the Program, including 

10 how to pursue a claim to completion; 

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

12 loss, and any other information relating to the filing 

13 of claims under the Program; and

14 (3) detailed information regarding the appeals 

15 process established under section 205. 

16 (b) DISTRIBUTION.—The handbook developed under 

17 subsection (a) shall be made available to—

18 (1) each insurance company and agent author19 ized to sell flood insurance policies; and 

20 (2) each purchaser, at the time of purchase and 

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

22 of any flood loss sustained by such purchaser.
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1 SEC. 205. APPEAL OF DECISIONS RELATING TO FLOOD IN2 SURANCE COVERAGE. 

3 Not later than 6 months after the date of enactment 

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

5 appeals process through which holders of a flood insurance 

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

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

8 insurance policy, of—

9 (1) any insurance agent or adjuster, or insur10 ance company; or 

11 (2) any employee or contractor of the Federal 

12 Emergency Management Agency. 

13 SEC. 206. STUDY AND REPORT ON USE OF COST COMPLI14 ANCE COVERAGE. 

15 Not later than 1 year after the date of enactment 

16 of this Act, the Director of the Federal Emergency Man17 agement Agency shall submit to Congress a report that 

18 sets forth—

19 (1) the use of cost of compliance coverage 

20 under section 1304(b) of the National Flood Insur21 ance Act of 1968 (42 U.S.C. 4011(b)) in connection 

22 with flood insurance policies; 

23 (2) any barriers to policyholders using the 

24 funds provided by cost of compliance coverage under 

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

26 and recommendations to address those barriers; and 
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•S 2238 RS 

1 (3) the steps that the Federal Emergency Man2 agement Agency has taken to ensure that funds paid 

3 for cost of compliance coverage under that section 

4 1304(b) are being used to lessen the burdens on all 

5 homeowners and the Program. 

6 SEC. 207. MINIMUM TRAINING AND EDUCATION REQUIRE7 MENTS. 

8 The Director of the Federal Emergency Management 

9 Agency shall, in cooperation with the insurance industry, 

10 State insurance regulators, and other interested parties—

11 (1) establish minimum training and education 

12 requirements for all insurance agents who sell flood 

13 insurance policies; and 

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

15 enactment of this Act, publish these requirements in 

16 the Federal Register, and inform insurance compa17 nies and agents of the requirements. 

18 SEC. 208. GAO STUDY AND REPORT. 

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

20 States shall conduct a study of—

21 (1) the adequacy of the scope of coverage pro22 vided under flood insurance policies in meeting the 

23 intended goal of Congress that flood victims be re24 stored to their pre-flood conditions, and any rec25 ommendations to ensure that goal is being met; 
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•S 2238 RS 

1 (2) the adequacy of payments to flood victims 

2 under flood insurance policies; and 

3 (3) the practices of the Federal Emergency 

4 Management Agency and insurance adjusters in esti5 mating losses incurred during a flood, and how such 

6 practices affect the adequacy of payments to flood 

7 victims. 

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

9 of enactment of this Act, the Comptroller General shall 

10 submit to Congress a report regarding the results of the 

11 study under subsection (a). 

12 SEC. 209. PROSPECTIVE PAYMENT OF FLOOD INSURANCE 

13 PREMIUMS. 

14 Section 1308 of the National Flood Insurance Act of 

15 1968 (42 U.S.C. 4015) is amended by adding at the end 

16 the following: 

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

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

19 the holder of a flood insurance policy issued under this 

20 Act is paying a lower premium than is required under this 

21 section due to an error in the flood plain determination, 

22 the Director may only prospectively charge the higher pre23 mium rate.’’. 
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1 SEC. 210. REPORT ON CHANGES TO FEE SCHEDULE OR FEE 

2 PAYMENT ARRANGEMENTS. 

3 Not later than 3 months after the date of enactment 

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

5 changes or modifications made to the fee schedule or fee 

6 payment arrangements between the Federal Emergency 

7 Management Agency and insurance adjusters who provide 

8 services with respect to flood insurance policies to—

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

10 Urban Affairs of the Senate; and 

11 (2) the Committee on Financial Services of the 

12 House of Representatives.
Calendar No. 513

108TH CONGRESS 

2D SESSION S. 2238

[Report No. 108–262] 

A BILL

To amend the National Flood Insurance Act of 

been made. petitive flood insurance claim payments have 1968 to reduce losses to properties for which reMAY 13, 2004

Reported with amendments