II 

Calendar No. 498 

109TH CONGRESS 

2D SESSION S. 3589 

[Report No. 109–271] 

To amend the National Flood Insurance Act of 1968, to restore the financial 

solvency of the flood insurance fund, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 28, 2006 

Mr. SHELBY, from the Committee on Banking, Housing, and Urban Affairs 

reported the following original bill; which was read twice and placed on 

the calendar 

A BILL 

To amend the National Flood Insurance Act of 1968, to 

restore the financial solvency of the flood insurance fund, 

and for other purposes. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Flood Insurance Reform and Modernization Act of 

6 2006’’. 


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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. Findings. 

Sec. 3. Definitions. 

Sec. 4. Reform of premium rate structure. 

Sec. 5. Mandatory coverage areas. 

Sec. 6. Premium adjustment. 

Sec. 7. State chartered financial institutions. 

Sec. 8. Enforcement. 

Sec. 9. Escrow of flood insurance payments. 

Sec. 10. Financing of funds from the Treasury. 

Sec. 11. Borrowing authority debt forgiveness. 

Sec. 12. Minimum deductibles for claims under the National Flood Insurance 

Program. 

Sec. 13. Considerations in determining chargeable premium rates. 

Sec. 14. Reserve fund. 

Sec. 15. Repayment plan for borrowing authority. 

Sec. 16. Technical Mapping Advisory Council. 

Sec. 17. National Flood Mapping Program. 

Sec. 18. Removal of limitation on State contributions for updating flood maps. 

Sec. 19. Nonmandatory participation. 

Sec. 20. Notice of flood insurance availability under RESPA. 

Sec. 21. Testing of new floodproofing technologies. 

Sec. 22. Participation in State disaster claims mediation programs. 

Sec. 23. Reiteration of FEMA responsibilities under the 2004 Reform Act. 

Sec. 24. Studies, Audits, and Reports. 

3 SEC. 2. FINDINGS. 

4 Congress finds that— 

5 (1) the flood insurance claims resulting from 

6 the hurricane season of 2005 will likely exceed all 

7 previous claims paid by the National Flood Insur8 ance Program; 

9 (2) the continuation of subsidized premium 

10 rates undermines the financial solvency of the Na11 tional Flood Insurance Fund; 

12 (3) the presence of subsidized premium rates 

13 encourages families to continue residing in high risk 


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1 areas, often without appropriate mitigation activi2 ties; 

3 (4) substantial flooding occurs outside of exist4 ing special flood hazard areas; 

5 (5) recent events throughout the country involv6 ing areas behind man-made structures, known as 

7 ‘‘residual risk’’ areas, have produced catastrophic 

8 losses; 

9 (6) although such man-made structures produce 

10 an added element of safety and therefore lessen the 

11 probability that a disaster will occur, they are never12 theless susceptible to catastrophic loss, even though 

13 such areas at one time were not included within the 

14 100-year floodplain; and 

15 (7) voluntary participation in the National 

16 Flood Insurance Program has been minimal and 

17 many families residing outside the 100-year flood18 plain remain unaware of the potential risk to their 

19 lives and property. 

20 SEC. 3. DEFINITIONS. 

21 (a) IN GENERAL.—In this Act, the following defini22 tions shall apply: 

23 (1) NATIONAL FLOOD INSURANCE PROGRAM.— 

24 The term ‘‘National Flood Insurance Program’’ 

25 means the program established under the National 


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1 Flood Insurance Act of 1968 (42 U.S.C. 4011 et 

2 seq.). 

3 (2) 100-YEAR FLOODPLAIN.—The term ‘‘100- 

4 year floodplain’’ means that area which is subject to 

5 inundation from a flood having a 1 percent chance 

6 of being equaled or exceeded in any given year. 

7 (3) 500-YEAR FLOODPLAIN.—The term ‘‘500- 

8 year floodplain’’ means that area which is subject to 

9 inundation from a flood having a 0.2 percent chance 

10 of being equaled or exceeded in any given year. 

11 (4) WRITE YOUR OWN.—The term ‘‘Write Your 

12 Own’’ means the cooperative undertaking between 

13 the insurance industry and the Flood Insurance Ad14 ministration which allows participating property and 

15 casualty insurance companies to write and service 

16 standard flood insurance policies. 

17 (b) COMMON TERMINOLOGY.—Except as otherwise 

18 provided in this Act, any terms used in this Act shall have 

19 the meaning given to such terms under section 1370 of 

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

21 4121). 

22 SEC. 4. REFORM OF PREMIUM RATE STRUCTURE. 

23 (a) TO EXCLUDE CERTAIN PROPERTIES FROM RE24 CEIVING SUBSIDIZED PREMIUM RATES.— 


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1 (1) IN GENERAL.—Section 1307 of the Na2 tional Flood Insurance Act of 1968 (42 U.S.C. 

3 4014) is amended— 

4 (A) in subsection (a)— 

5 (i) in paragraph (2), by striking ‘‘; 

6 and’’ and inserting a semicolon; 

7 (ii) in paragraph (3), by striking the 

8 period at the end and inserting ‘‘; and’’; 

9 and 

10 (iii) by adding at the end the fol11 lowing: 

12 ‘‘(4) the exclusion of prospective insureds from 

13 purchasing flood insurance at rates less than those 

14 estimated under paragraph (1), as required by para15 graph (2), for certain properties, including for— 

16 ‘‘(A) any property which is not the pri17 mary residence of an individual; 

18 ‘‘(B) any severe repetitive loss property, as 

19 defined in section 1361A(b); 

20 ‘‘(C) any property that has incurred flood21 related damage in which the cumulative 

22 amounts of payments under this title equaled or 

23 exceeded the fair market value of such property; 

24 ‘‘(D) any business property; and 


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1 ‘‘(E) any property which on or after the 

2 date of enactment of the Flood Insurance Re3 form and Modernization Act of 2006 has expe4 rienced or sustained— 

5 ‘‘(i) substantial damage exceeding 50 

6 percent of the fair market value of such 

7 property; or 

8 ‘‘(ii) substantial improvement exceed9 ing 30 percent of the fair market value of 

10 such property.’’; and 

11 (B) by adding at the end the following: 

12 ‘‘(g) NO EXTENSION OF SUBSIDY TO NEW POLICIES

13 OR LAPSED POLICIES.—The Director shall not provide 

14 flood insurance to prospective insureds at rates less than 

15 those estimated under subsection (a)(1), as required by 

16 paragraph (2) of that subsection, for— 

17 ‘‘(1) any property not insured by the flood in18 surance program as of the date of enactment of the 

19 Flood Insurance Reform and Modernization Act of 

20 2006; and 

21 ‘‘(2) any policy under the flood insurance pro22 gram that has lapsed in coverage, as a result of the 

23 deliberate choice of the holder of such policy.’’. 


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1 (2) EFFECTIVE DATE.—The amendments made 

2 by paragraph (1) shall become effective 90 days 

3 after the date of the enactment of this Act. 

4 (b) INCREASE IN ANNUAL LIMITATION ON PREMIUM

5 INCREASES.—Section 1308(e) of the National Flood In6 surance Act of 1968 (42 U.S.C. 4015(e)) is amended— 

7 (1) by striking ‘‘under this title for any prop8 erties within any single’’ and inserting the following: 

9 ‘‘under this title for any properties— 

10 ‘‘(1) within any single’’; 

11 (2) by striking ‘‘10 percent’’ and inserting ‘‘15 

12 percent’’; and 

13 (3) by striking the period at the end and insert14 ing the following: ‘‘; and 

15 ‘‘(2) described in section 1307(a)(4) shall be in16 creased by 25 percent each year, until the average 

17 risk premium rate for such properties is equal to the 

18 average of the risk premium rates for properties de19 scribed under paragraph (1).’’. 

20 SEC. 5. MANDATORY COVERAGE AREAS. 

21 (a) SPECIAL FLOOD HAZARD AREAS.—Not later 

22 than 90 days after the date of enactment of this Act, the 

23 Director shall issue final regulations establishing a revised 

24 definition of areas of special flood hazards for purposes 

25 of the National Flood Insurance Program. 


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1 (b) RESIDUAL RISK AREAS.—The regulations re2 quired by subsection (a) shall— 

3 (1) include any area previously identified by the 

4 Director as an area having special flood hazards 

5 under section 102 of the Flood Disaster Protection 

6 Act of 1973 (42 U.S.C. 4012a)); and 

7 (2) require the expansion of areas of special 

8 flood hazards to include areas of residual risk, in9 cluding areas that are located behind levees, dams, 

10 and other man-made structures. 

11 (c) MANDATORY PARTICIPATION IN NATIONAL

12 FLOOD INSURANCE PROGRAM.— 

13 (1) IN GENERAL.—Any area described in sub14 section (b) shall be subject to the mandatory pur15 chase requirements of sections 102 and 202 of the 

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

17 4012a, 4106). 

18 (2) LIMITATION.—The mandatory purchase re19 quirement under paragraph (1) shall have no force 

20 or effect until the Director completes the mapping of 

21 all residual risk areas in the United States that the 

22 Director determines essential in order to administer 

23 the National Flood Insurance Program, as required 

24 under section 17. 


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1 SEC. 6. PREMIUM ADJUSTMENT. 

2 Section 1308 of the National Flood Insurance Act of 

3 1968 (42 U.S.C. 4015) is amended by adding at the end 

4 the following: 

5 ‘‘(g) PREMIUM ADJUSTMENT TO REFLECT CURRENT

6 RISK OF FLOOD.—Notwithstanding subsection (f), and 

7 upon completion of the updating of any flood insurance 

8 rate map under this Act, the Flood Disaster Protection 

9 Act of 1973, or the Flood Insurance Reform and Mod10 ernization Act of 2006, any property located in an area 

11 that is participating in the national flood insurance pro12 gram may have the risk premium rate charged for flood 

13 insurance on such property adjusted to accurately reflect 

14 the current risk of flood to such property, subject to any 

15 other provision of this Act.’’. 

16 SEC. 7. STATE CHARTERED FINANCIAL INSTITUTIONS. 

17 Section 1305(c) of the National Flood Insurance Act 

18 of 1968 (42 U.S.C. 4012(c)) is amended— 

19 (1) in paragraph (1), by striking ‘‘; and’’ and 

20 inserting a semicolon; 

21 (2) in paragraph (2), by striking the period at 

22 the end and inserting ‘‘; and’’; and 

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

24 ‘‘(3) given satisfactory assurance that by De25 cember 31, 2008, lending institutions chartered by a 

26 State, and not insured by the Federal Deposit InsurVerDate Aug 31 2005 23:50 Jun 28, 2006 Jkt 049200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3589.RS S3589

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1 ance Corporation, shall be subject to regulations by 

2 that State that are consistent with the requirements 

3 of section 102 of the Flood Disaster Protection Act 

4 of 1973 (42 U.S.C. 4012a).’’. 

5 SEC. 8. ENFORCEMENT. 

6 Section 102(f)(5) of the Flood Disaster Protection 

7 Act of 1973 (42 U.S.C. 4012a(f)(5)) is amended— 

8 (1) in the first sentence, by striking ‘‘$350’’ 

9 and inserting ‘‘$2,000’’; and 

10 (2) by striking the second sentence. 

11 SEC. 9. ESCROW OF FLOOD INSURANCE PAYMENTS. 

12 (a) IN GENERAL.—Section 102(d) of the Flood Dis13 aster Protection Act of 1973 (42 U.S.C. 4012a(d)) is 

14 amended— 

15 (1) by amending paragraph (1) to read as fol16 lows: 

17 ‘‘(1) REGULATED LENDING INSTITUTIONS.— 

18 Each Federal entity for lending regulation (after 

19 consultation and coordination with the Federal Fi20 nancial Institutions Examination Council) shall, by 

21 regulation, direct that any premiums and fees for 

22 flood insurance under the National Flood Insurance 

23 Act of 1968, on any property for which a loan has 

24 been made for acquisition or construction purposes 

25 shall be paid to the mortgage lender, with the same 


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1 frequency as payments on the loan are made, for the 

2 duration of the loan. Upon receipt of any premiums 

3 or fees, the lender shall deposit such premiums and 

4 fees in an escrow account on behalf of the borrower. 

5 Upon receipt of a notice from the Director or the 

6 provider of the flood insurance that insurance pre7 miums are due, the remaining balance of an escrow 

8 account shall be paid to the provider of the flood in9 surance.’’; and 

10 (2) by adding at the end the following: 

11 ‘‘(6) NOTICE UPON LOAN TERMINATION.—Upon 

12 final payment of the mortgage, a regulated lending 

13 institution shall provide notice to the policyholder 

14 that insurance coverage may cease with such final 

15 payment. The regulated lending institution shall also 

16 provide direction as to how the homeowner may con17 tinue flood insurance coverage after the life of the 

18 loan.’’. 

19 (b) APPLICABILITY.—The amendment made by sub20 section (a)(1) shall apply to any mortgage outstanding or 

21 entered into on or after the expiration of the 2-year period 

22 beginning on the date of enactment of this Act. 

23 SEC. 10. FINANCING OF FUNDS FROM THE TREASURY. 

24 (a) IN GENERAL.—Notwithstanding the require25 ments of section 15(e) of the Federal Flood Insurance Act 


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1 of 1956 (42 U.S.C. 2414(e)), the Secretary of the Treas2 ury is authorized and directed to transfer, without secur3 ing any notes or other obligations from the Director, such 

4 sums as may be necessary for the payment of claims for 

5 any damage to or loss of property which is covered by 

6 flood insurance made available under the National Flood 

7 Insurance Program, including any sums which are in ex8 cess of amounts borrowed by the Director from the Sec9 retary, as of the date of enactment of this Act, under the 

10 authority vested to the Director under section 1309 of the 

11 National Flood Insurance Act of 1968 (42 U.S.C. 4016), 

12 to pay claims resulting from the hurricane season of 2005. 

13 (b) PUBLIC DEBT TRANSACTIONS.—In meeting the 

14 obligations established under subsection (a), the Secretary 

15 of the Treasury is authorized to use as a public debt trans16 action the proceeds of the sale of any securities issued 

17 after the date of enactment of this Act under chapter 31 

18 of title 31, United States Code. 

19 SEC. 11. BORROWING AUTHORITY DEBT FORGIVENESS. 

20 (a) IN GENERAL.—The Secretary of the Treasury re21 linquishes the right to any repayment of amounts due 

22 from the Director in connection with the exercise of the 

23 authority vested to the Director to borrow such sums 

24 under section 1309 of the National Flood Insurance Act 

25 of 1968 (42 U.S.C. 4016), to the extent such borrowed 


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1 sums were used to fund the payment of flood insurance 

2 claims under the National Flood Insurance Program for 

3 any damage to or loss of property resulting from the hurri4 canes of 2005. 

5 (b) CERTIFICATION.—The debt forgiveness described 

6 under subsection (a) shall only take effect if the Director 

7 certifies to the Secretary of Treasury that all authorized 

8 resources or funds available to the Director to operate the 

9 National Flood Insurance Program— 

10 (1) have been otherwise obligated to pay claims 

11 under the National Flood Insurance Program; and 

12 (2) are not otherwise available to make pay13 ments to the Secretary on any outstanding notes or 

14 obligations issued by the Director and held by the 

15 Secretary. 

16 (c) DECREASE IN BORROWING AUTHORITY.—The 

17 first sentence of subsection (a) of section 1309 of the Na18 tional Flood Insurance Act of 1968 (42 U.S.C. 4016(a)), 

19 as amended by the National Flood Insurance Program 

20 Enhanced Borrowing Authority Act of 2006 (Public Law 

21 109–208; 120 Stat. 317), is amended by striking 

22 ‘‘$20,775,000,000’’ and inserting ‘‘$1,500,000,000’’. 


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1 SEC. 12. MINIMUM DEDUCTIBLES FOR CLAIMS UNDER THE 

2 NATIONAL FLOOD INSURANCE PROGRAM. 

3 Section 1312 of the National Flood Insurance Act of 

4 1968 (42 U.S.C. 4019) is amended— 

5 (1) by striking ‘‘The Director is’’ and inserting 

6 the following: 

7 ‘‘(a) IN GENERAL.—The Director is’’; and 

8 (2) by adding at the end the following: 

9 ‘‘(b) MINIMUM ANNUAL DEDUCTIBLE.—For any 

10 property or structure which is covered by flood insurance 

11 under this title, the minimum annual deductible shall be— 

12 ‘‘(1) $2,000, if construction or substantial im13 provement occurred on such property or structure on 

14 or before December 31, 1974, or before the effective 

15 date of an initial flood insurance rate map published 

16 by the Director under section 1360 for the area in 

17 which such property or structure is located; and 

18 ‘‘(2) $1,000, if construction or substantial im19 provement occurred on such property or structure 

20 after December 31, 1974, or after the effective date 

21 of an initial flood insurance rate map published by 

22 the Director under section 1360 for the area in 

23 which such property or structure is located.’’. 


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1 SEC. 13. CONSIDERATIONS IN DETERMINING CHARGEABLE 

2 PREMIUM RATES. 

3 Section 1308 of the National Flood Insurance Act of 

4 1968 (42 U.S.C. 4015(b)) is amended— 

5 (1) in subsection (a), by striking ‘‘, after con6 sultation with’’ and all that follows through ‘‘by reg7 ulation’’ and inserting ‘‘prescribe, after providing 

8 notice’’; 

9 (2) in subsection (b)— 

10 (A) in paragraph (1), by striking the pe11 riod at the end and inserting a semicolon; 

12 (B) in paragraph (2), by striking the 

13 comma at the end and inserting a semicolon; 

14 (C) in paragraph (3), by striking ‘‘, and’’ 

15 and inserting a semicolon; 

16 (D) in paragraph (4), by striking the pe17 riod and inserting ‘‘; and’’; and 

18 (E) by adding at the end the following: 

19 ‘‘(5) adequate, on the basis of accepted actu20 arial principles, to cover the average historical loss 

21 year obligations incurred by the National Flood In22 surance Fund.’’; and 

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

24 ‘‘(h) RULE OF CONSTRUCTION.—For purposes of this 

25 section, the calculation of an ‘average historical loss year’ 

26 includes catastrophic loss years.’’. 


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1 SEC. 14. RESERVE FUND. 

2 Chapter I of the National Flood Insurance Act of 

3 1968 (42 U.S.C. 4011 et seq.) is amended by inserting 

4 after section 1310 the following: 

5 ‘‘SEC. 1310A. RESERVE FUND. 

6 ‘‘(a) IN GENERAL.—In carrying out the flood insur7 ance program authorized by this chapter, the Director 

8 shall establish in the Treasury of the United States a Na9 tional Flood Insurance Reserve Fund (in this section re10 ferred to as the ‘Reserve Fund’) which shall— 

11 ‘‘(1) be an account separate from any other ac12 counts or funds available to the Director; and 

13 ‘‘(2) be available for meeting the expected fu14 ture obligations of the flood insurance program. 

15 ‘‘(b) RESERVE RATIO.—Subject to the phase-in re16 quirements under subsection (d), the Reserve Fund shall 

17 maintain a balance equal to— 

18 ‘‘(1) 1 percent of the sum of the total potential 

19 loss exposure of all outstanding flood insurance poli20 cies in force in the prior fiscal year; or 

21 ‘‘(2) such higher percentage as the Director de22 termines to be appropriate, taking into consideration 

23 any circumstance that may raise a significant risk of 

24 substantial future losses to the Reserve Fund. 

25 ‘‘(c) MAINTENANCE OF RESERVE RATIO.— 


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1 ‘‘(1) IN GENERAL.—The Director shall have the 

2 authority to establish, increase, or decrease the 

3 amount of aggregate annual insurance premiums to 

4 be collected for any fiscal year necessary— 

5 ‘‘(A) to maintain the reserve ratio required 

6 under subsection (b); and 

7 ‘‘(B) to achieve such reserve ratio, if the 

8 actual balance of such reserve is below the 

9 amount required under subsection (b). 

10 ‘‘(2) CONSIDERATIONS.—In exercising the au11 thority granted under paragraph (1), the Director 

12 shall consider— 

13 ‘‘(A) the expected operating expenses of 

14 the Reserve Fund; 

15 ‘‘(B) the insurance loss expenditures under 

16 the flood insurance program; 

17 ‘‘(C) any investment income generated 

18 under the flood insurance program; and 

19 ‘‘(D) any other factor that the Director de20 termines appropriate. 

21 ‘‘(3) LIMITATION.—In exercising the authority 

22 granted under paragraph (1), the Director may not 

23 establish, increase, or decrease the amount of aggre24 gate annual insurance premiums to be collected for 

25 any fiscal year in excess of any amount necessary— 


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1 ‘‘(A) to maintain the reserve ratio required 

2 under subsection (b); and 

3 ‘‘(B) to achieve such reserve ratio, if the 

4 actual balance of such reserve is below the 

5 amount required under subsection (b). 

6 ‘‘(d) PHASE-IN REQUIREMENTS.—The phase-in re7 quirements under this subsection are as follows: 

8 ‘‘(1) For fiscal year 2007, the reserve ratio 

9 shall be equal to not less than 10 percent of the re10 serve ratio required under subsection (b). 

11 ‘‘(2) For fiscal year 2008, the reserve ratio 

12 shall be equal to not less than 20 percent of the re13 serve ratio required under subsection (b). 

14 ‘‘(3) For fiscal year 2009, the reserve ratio 

15 shall be equal to not less than 30 percent of the re16 serve ratio required under subsection (b). 

17 ‘‘(4) For fiscal year 2010, the reserve ratio 

18 shall be equal to not less than 40 percent of the re19 serve ratio required under subsection (b). 

20 ‘‘(5) For fiscal year 2011, the reserve ratio 

21 shall be equal to not less than 50 percent of the re22 serve ratio required under subsection (b). 

23 ‘‘(6) For fiscal year 2012, the reserve ratio 

24 shall be equal to not less than 60 percent of the re25 serve ratio required under subsection (b). 


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1 ‘‘(7) For fiscal year 2013, the reserve ratio 

2 shall be equal to not less than 70 percent of the re3 serve ratio required under subsection (b). 

4 ‘‘(8) For fiscal year 2014, the reserve ratio 

5 shall be equal to not less than 80 percent of the re6 serve ratio required under subsection (b). 

7 ‘‘(9) For fiscal year 2015, the reserve ratio 

8 shall be equal to not less than 90 percent of the re9 serve ratio required under subsection (b). 

10 ‘‘(e) LIMITATION ON RESERVE RATIO.—In any given 

11 fiscal year, if the Director determines that attaining the 

12 reserve ratio required under subsection (b) would have se13 rious negative consequences to the flood insurance pro14 gram, the Director shall submit a report to Congress 

15 that— 

16 ‘‘(1) describes and details the specific concerns 

17 of the Director regarding such consequences; 

18 ‘‘(2) demonstrates how such consequences 

19 would harm the long-term financial soundness of the 

20 flood insurance program; and 

21 ‘‘(3) indicates the maximum attainable reserve 

22 ratio for that particular fiscal year.’’. 


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1 SEC. 15. REPAYMENT PLAN FOR BORROWING AUTHORITY. 

2 Section 1309 of the National Flood Insurance Act of 

3 1968 (42 U.S.C. 4016) is amended by adding at the end 

4 the following: 

5 ‘‘(c) Any funds borrowed by the Director under the 

6 authority established in subsection (a) shall include a 

7 schedule for repayment of such amounts which shall be 

8 transmitted to the— 

9 ‘‘(1) Secretary of the Treasury; 

10 ‘‘(2) Committee on Banking, Housing, and 

11 Urban Affairs of the Senate; and 

12 ‘‘(3) Committee on Financial Services of the 

13 House of Representatives. 

14 ‘‘(d) In addition to the requirement under subsection 

15 (c), in connection with any funds borrowed by the Director 

16 under the authority established in subsection (a), the Di17 rector, beginning 6 months after the date on which such 

18 borrowed funds are issued, and continuing every 6 months 

19 thereafter until such borrowed funds are fully repaid, shall 

20 submit a report on the progress of such repayment to 

21 the— 

22 ‘‘(1) Secretary of the Treasury; 

23 ‘‘(2) Committee on Banking, Housing, and 

24 Urban Affairs of the Senate; and 

25 ‘‘(3) Committee on Financial Services of the 

26 House of Representatives.’’. 


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1 SEC. 16. TECHNICAL MAPPING ADVISORY COUNCIL. 

2 (a) ESTABLISHMENT.—There is established a council 

3 to be known as the Technical Mapping Advisory Council 

4 (in this section referred to as the ‘‘Council’’). 

5 (b) MEMBERSHIP.— 

6 (1) IN GENERAL.—The Council shall consist of 

7 the Director, or the designee thereof, and 11 addi8 tional members to be appointed by the Director or 

9 the designee of the Director, who shall be— 

10 (A) the Under Secretary of Commerce for 

11 Oceans and Atmosphere (or the designee there12 of); 

13 (B) a member of recognized surveying and 

14 mapping professional associations and organiza15 tions; 

16 (C) a member of recognized professional 

17 engineering associations and organizations; 

18 (D) a member of recognized professional 

19 associations or organizations representing flood 

20 hazard determination firms; 

21 (E) a representative of the United States 

22 Geological Survey; 

23 (F) a representative of the Office of Man24 agement and Budget; 


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1 (G) a representative of recognized profes2 sional associations or organizations representing 

3 State geographic information; 

4 (H) a representative of State national flood 

5 insurance coordination offices; 

6 (I) a representative of the Corps of Engi7 neers; 

8 (J) the Secretary of the Interior (or the 

9 designee thereof); and 

10 (K) the Secretary of Agriculture (or the 

11 designee thereof). 

12 (2) QUALIFICATIONS.—Members of the Council 

13 shall be appointed based on their demonstrated 

14 knowledge and competence regarding surveying, car15 tography, remote sensing, geographic information 

16 systems, or the technical aspects of preparing and 

17 using flood insurance rate maps. 

18 (c) DUTIES.—The Council shall— 

19 (1) make recommendations to the Director on 

20 how to improve in a cost-effective manner the accu21 racy, general quality, ease of use, and distribution 

22 and dissemination of flood insurance rate maps; 

23 (2) recommend to the Director mapping stand24 ards and guidelines for flood insurance rate maps; 

25 and 


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1 (3) submit an annual report to the Director 

2 that contains— 

3 (A) a description of the activities of the 

4 Council; 

5 (B) an evaluation of the status and per6 formance of flood insurance rate maps and 

7 mapping activities to revise and update flood in8 surance rate maps, as required under section 

9 17; 

10 (C) a summary of recommendations made 

11 by the Council to the Director, including— 

12 (i) performance metrics and mile13 stones to effectively and efficiently map 

14 flood risk areas in the United States; 

15 (ii) procedures for delegating mapping 

16 activities to State and local government 

17 mapping partners; and 

18 (iii) establishing standards for data 

19 quality, data currency, and data eligibility; 

20 and 

21 (D) recommendations for private contrac22 tors to carry out the recommendations of the 

23 Council. 


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1 (d) CHAIRPERSON.—The members of the Council 

2 shall elect 1 member to serve as the chairperson of the 

3 Council (in this section referred to as the ‘‘Chairperson’’). 

4 (e) COORDINATION.—To ensure that the Council’s 

5 recommendations are consistent, to the maximum extent 

6 practicable, with national digital spatial data collection 

7 and management standards, the Chairperson shall consult 

8 with the Chairperson of the Federal Geographic Data 

9 Committee (established pursuant to OMB Circular A–16). 

10 (f) COMPENSATION.—Members of the Council shall 

11 receive no additional compensation by reason of their serv12 ice on the Council. 

13 (g) MEETINGS AND ACTIONS.— 

14 (1) IN GENERAL.—The Council shall meet not 

15 less frequently than twice each year at the request 

16 of the Chairperson or a majority of its members, 

17 and may take action by a vote of the majority of the 

18 members. 

19 (2) INITIAL MEETING.—The Director, or a per20 son designated by the Director, shall request and co21 ordinate the initial meeting of the Council. 

22 (h) OFFICERS.—The Chairperson may appoint offi23 cers to assist in carrying out the duties of the Council 

24 under subsection (c). 


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1 (i) STAFF OF FEMA.—Upon the request of the 

2 Chairperson, the Director may detail, on a nonreimburs3 able basis, personnel of the Federal Emergency Manage4 ment Agency to assist the Council in carrying out its du5 ties. 

6 (j) POWERS.—In carrying out this section, the Coun7 cil may hold hearings, receive evidence and assistance, pro8 vide information, and conduct research, as it considers ap9 propriate. 

10 (k) TERMINATION.—The Council shall terminate 5 

11 years after the date of enactment of this Act. 

12 SEC. 17. NATIONAL FLOOD MAPPING PROGRAM. 

13 (a) REVIEWING, UPDATING, AND MAINTAINING

14 MAPS.—The Director, in coordination with the Technical 

15 Mapping Advisory Council established under section 16, 

16 shall establish a program under which the Director shall 

17 review, update, and maintain National Flood Insurance 

18 Program rate maps in accordance with this section. 

19 (b) MAPPING.— 

20 (1) IN GENERAL.—In carrying out the program 

21 established under subsection (a), the Director 

22 shall— 

23 (A) identify, review, update, maintain, and 

24 publish National Flood Insurance Program rate 

25 maps with respect to— 


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1 (i) all areas located within the 500- 

2 year floodplain that have not previously 

3 been identified, including coastal areas lo4 cated in the United States; 

5 (ii) areas of residual risk that have 

6 not previously been identified, including 

7 areas that are located behind levees, dams, 

8 and other man-made structures; and 

9 (iii) areas that could be inundated as 

10 a result of the failure of a dam, as identi11 fied under the National Dam Safety Pro12 gram Act (33 U.S.C. 467 et seq.); 

13 (B) establish or update flood-risk zone 

14 data in all such areas, and make estimates with 

15 respect to the rates of probable flood caused 

16 loss for the various flood risk zones for each 

17 such area; and 

18 (C) use, in identifying, reviewing, updat19 ing, maintaining, or publishing any National 

20 Flood Insurance Program rate map required 

21 under this section or under the National Flood 

22 Insurance Act of 1968, the most accurate to23 pography and elevation data available. 

24 (2) MAPPING ELEMENTS.—Each map updated 

25 under this section shall include the following: 


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1 (A) NEW GROUND ELEVATION DATA.— 

2 (i) IN GENERAL.—New ground ele3 vation data utilizing the newest tech4 nologies for the development of hydrologic 

5 and hydraulic modeling to support all 

6 flooding sources. 

7 (ii) DEFINITION.—As used in clause 

8 (i), the term ‘‘new ground elevation data’’ 

9 means data that meets the requirements of 

10 Appendix A, Guidance for Aerial Mapping 

11 and Surveying, of the Federal Emergency 

12 Management Agency’s ‘‘Guidelines and 

13 Specifications for Flood Hazard Mapping 

14 Partners’’ as in effect on the date of enact15 ment of this Act. 

16 (B) DATA ON A WATERSHED BASIS.—De17 lineation of National Flood Insurance Program 

18 flood data on a watershed basis— 

19 (i) to provide the most technically ef20 fective and efficient studies and hydrologic 

21 and hydraulic modeling; and 

22 (ii) to eliminate, to the maximum ex23 tent possible, discrepancies in base flood 

24 elevations between adjacent political sub25 divisions. 


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1 (C) VERTICAL POSITIONING.—Vertical po2 sitioning of the lowest floor and lowest adjacent 

3 grade coordinate elevation data in the national 

4 inventory of structures. 

5 (3) OTHER INCLUSIONS.—In updating maps 

6 under this section, the Director shall include— 

7 (A) any relevant information on coastal in8 undation from— 

9 (i) an applicable inundation map of 

10 the Corps of Engineers; and 

11 (ii) data of the National Oceanic and 

12 Atmospheric Administration relating to 

13 storm surge modeling; 

14 (B) any relevant information of the United 

15 States Geological Survey on stream flows, wa16 tershed characteristics, and topography that is 

17 useful in the identification of flood hazard 

18 areas, as determined by the Director; and 

19 (C) a description of any hazard that might 

20 impact flooding, including, as determined by the 

21 Director— 

22 (i) land subsidence and coastal erosion 

23 areas; 

24 (ii) sediment flow areas; 

25 (iii) mud flow areas; 


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1 (iv) ice jam areas; and 

2 (v) areas on coasts and inland that 

3 are subject to the failure of structural pro4 tective works, such as levees, dams, and 

5 floodwalls. 

6 (c) STANDARDS.—In updating and maintaining maps 

7 under this section, the Director shall— 

8 (1) establish standards to— 

9 (A) ensure that maps are adequate for— 

10 (i) flood risk determinations; and 

11 (ii) use by State and local govern12 ments in managing development to reduce 

13 the risk of flooding; and 

14 (B) facilitate identification and use of con15 sistent methods of data collection and analysis 

16 by the Director, in conjunction with State and 

17 local governments, in developing maps for com18 munities with similar flood risks, as determined 

19 by the Director; and 

20 (2) publish maps in a format that is— 

21 (A) digital; 

22 (B) geospatial data-compliant, as deter23 mined in accordance with the standards for 

24 such compliance established by the Open 

25 Geospatial Consortium; and 


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1 (C) compliant with the North American 

2 Vertical Datum of 1988. 

3 (d) AUTHORIZATION OF APPROPRIATIONS.—There is 

4 authorized to be appropriated to the Director to carry out 

5 this section $400,000,000 for each of fiscal years 2007 

6 through 2012. 

7 SEC. 18. REMOVAL OF LIMITATION ON STATE CONTRIBU8 TIONS FOR UPDATING FLOOD MAPS. 

9 Section 1360(f)(2) of the National Flood Insurance 

10 Act of 1968 (42 U.S.C. 4101(f)(2)) is amended by striking 

11 ‘‘, but which may not exceed 50 percent of the cost of 

12 carrying out the requested revision or update’’. 

13 SEC. 19. NONMANDATORY PARTICIPATION. 

14 (a) NONMANDATORY PARTICIPATION IN NATIONAL

15 FLOOD INSURANCE PROGRAM FOR 500-YEAR FLOOD16 PLAIN.—Any area located within the 500-year floodplain 

17 shall not be subject to the mandatory purchase require18 ments of sections 102 or 202 of the Flood Disaster Protec19 tion Act of 1973 (42 U.S.C. 4012a, 4106). 

20 (b) NOTICE.— 

21 (1) BY DIRECTOR.—In carrying out the Na22 tional Flood Insurance Program, the Director shall 

23 provide notice to any community located in an area 

24 within the 500-year floodplain. 


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1 (2) TIMING OF NOTICE.—The notice required 

2 under paragraph (1) shall be made not later than 6 

3 months after the date of completion of the initial 

4 mapping of the 500-year floodplain, as required 

5 under section 17. 

6 (3) LENDER REQUIRED NOTICE.— 

7 (A) REGULATED LENDING INSTITU8 TIONS.—Each Federal or State entity for lend9 ing regulation (after consultation and coordina10 tion with the Federal Financial Institutions Ex11 amination Council) shall, by regulation, require 

12 regulated lending institutions, as a condition of 

13 making, increasing, extending, or renewing any 

14 loan secured by property located in an area 

15 within the 500-year floodplain, to notify the 

16 purchaser or lessee (or obtain satisfactory as17 surances that the seller or lessor has notified 

18 the purchaser or lessee) and the servicer of the 

19 loan that such property is located in an area 

20 within the 500-year floodplain, in a manner 

21 that is consistent with and substantially iden22 tical to the notice required under section 

23 1364(a)(1) of the National Flood Insurance Act 

24 of 1968 (42 U.S.C. 4104a(a)(1)). 


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1 (B) FEDERAL OR STATE AGENCY LEND2 ERS.—Each Federal or State agency lender 

3 shall, by regulation, require notification in the 

4 same manner as provided under subparagraph 

5 (A) with respect to any loan that is made by a 

6 Federal or State agency lender and secured by 

7 property located in an area within the 500-year 

8 floodplain. 

9 (C) PENALTY FOR NONCOMPLIANCE.—Any 

10 regulated lending institution or Federal or 

11 State agency lender that fails to comply with 

12 the notice requirements established by this 

13 paragraph shall be subject to the penalties pre14 scribed under section 102(f)(5) of the Flood 

15 Disaster Protection Act of 1973 (42 U.S.C. 

16 4012a(f)(5)). 

17 SEC. 20. NOTICE OF FLOOD INSURANCE AVAILABILITY 

18 UNDER RESPA. 

19 Section 5(b) of the Real Estate Settlement Proce20 dures Act of 1974 (12 U.S.C. 2604(b)) is amended— 

21 (1) in paragraph (4), by striking ‘‘; and’’ and 

22 inserting a semicolon; 

23 (2) in paragraph (5), by striking the period and 

24 inserting ‘‘; and’’; and 

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


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1 ‘‘(6) an explanation of flood insurance and the 

2 availability of flood insurance under the National 

3 Flood Insurance Program, whether or not the real 

4 estate is located in an area having special flood haz5 ards.’’. 

6 SEC. 21. TESTING OF NEW FLOODPROOFING TECH7 NOLOGIES. 

8 (a) PERMISSIBLE TESTING.—A residential structure 

9 built for the purpose of testing a new flood proofing tech10 nology, as described in subsection (b), in any State or 

11 community that receives mitigation assistance under sec12 tion 1366 of the National Flood Insurance Act of 1968 

13 (42 U.S.C. 4104c) may not be construed to be in violation 

14 of any flood risk mitigation plan developed by that State 

15 or community and approved by the Director of the Federal 

16 Emergency Management Agency. 

17 (b) CONDITIONS ON TESTING.—Testing permitted 

18 under subsection (a) shall— 

19 (1) be performed on an uninhabited residential 

20 structure; 

21 (2) require dismantling of the structure at the 

22 conclusion of such testing; and 

23 (3) require that all costs associated with such 

24 testing and dismantling be covered by the individual 


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1 or entity conducting the testing, or on whose behalf 

2 the testing is conducted. 

3 (c) RULE OF CONSTRUCTION.—Nothing in this sec4 tion shall be construed to alter, limit, or extend the avail5 ability of flood insurance to any structure that may em6 ploy, utilize, or apply any technology tested under sub7 section (b). 

8 SEC. 22. PARTICIPATION IN STATE DISASTER CLAIMS MEDI9 ATION PROGRAMS. 

10 Chapter I of the National Flood Insurance Act of 

11 1968 (42 U.S.C. 4011 et seq.) is amended by inserting 

12 after section 1313 the following: 

13 ‘‘SEC. 1314. PARTICIPATION IN STATE DISASTER CLAIMS 

14 MEDIATION PROGRAMS. 

15 ‘‘(a) REQUIREMENT TO PARTICIPATE.—In the case 

16 of the occurrence of a major disaster, as defined in section 

17 102 of the Robert T. Stafford Disaster Relief and Emer18 gency Assistance Act (42 U.S.C. 5122) that may have re19 sulted in flood damage under the flood insurance program 

20 established under this chapter and other personal lines 

21 residential property insurance coverage offered by a State 

22 regulated insurer, upon request made by the insurance 

23 commissioner of a State (or such other official responsible 

24 for regulating the business of insurance in the State) for 

25 the participation of representatives of the Director in a 


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1 program sponsored by such State for nonbinding medi2 ation of insurance claims resulting from a major disaster, 

3 the Director shall cause representatives of the flood insur4 ance program to participate in such a State program 

5 where claims under the flood insurance program are in6 volved to expedite settlement of flood damage claims re7 sulting from such disaster. 

8 ‘‘(b) EXTENT OF PARTICIPATION.—In satisfying the 

9 requirements of subsection (a), the Director shall require 

10 that each representative of the Director— 

11 ‘‘(1) be certified for purposes of the flood insur12 ance program to settle claims against such program 

13 resulting from such disaster in amounts up to the 

14 limits of policies under such program; 

15 ‘‘(2) attend State-sponsored mediation meetings 

16 regarding flood insurance claims resulting from such 

17 disaster at such times and places as may be ar18 ranged by the State; 

19 ‘‘(3) participate in good faith negotiations to20 ward the settlement of such claims with policy21 holders of coverage made available under the flood 

22 insurance program; and 

23 ‘‘(4) finalize the settlement of such claims on 

24 behalf of the flood insurance program with such pol25 icyholders. 


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1 ‘‘(c) COORDINATION.—Representatives of the Direc2 tor shall at all times coordinate their activities with insur3 ance officials of the State and representatives of insurers 

4 for the purposes of consolidating and expediting settle5 ment of claims under the national flood insurance program 

6 resulting from such disaster. 

7 ‘‘(d) QUALIFICATIONS OF MEDIATORS.—Each State 

8 mediator participating in State-sponsored mediation under 

9 this section shall be— 

10 ‘‘(1)(A) a member in good standing of the State 

11 bar in the State in which the mediation is to occur 

12 with at least 2 years of practical experience; and 

13 ‘‘(B) an active member of such bar for at least 

14 1 year prior to the year in which such mediator’s 

15 participation is sought; or 

16 ‘‘(2) a retired trial judge from any United 

17 States jurisdiction who was a member in good stand18 ing of the bar in the State in which the judge pre19 sided for at least 5 years prior to the year in which 

20 such mediator’s participation is sought. 

21 ‘‘(e) MEDIATION PROCEEDINGS AND DOCUMENTS

22 PRIVILEGED.—As a condition of participation, all state23 ments made and documents produced pursuant to State24 sponsored mediation involving representatives of the DiVerDate Aug 31 2005 23:50 Jun 28, 2006 Jkt 049200 PO 00000 Frm 00036 Fmt 6652 Sfmt 6201 E:\BILLS\S3589.RS S3589

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1 rector shall be deemed privileged and confidential settle2 ment negotiations made in anticipation of litigation. 

3 ‘‘(f) LIABILITY, RIGHTS, OR OBLIGATIONS NOT AF4 FECTED.—Participation in State-sponsored mediation, as 

5 described in this section does not— 

6 ‘‘(1) affect or expand the liability of any party 

7 in contract or in tort; or 

8 ‘‘(2) affect the rights or obligations of the par9 ties, as established— 

10 ‘‘(A) in any regulation issued by the Direc11 tor, including any regulation relating to a 

12 Standard Flood Insurance Policy; 

13 ‘‘(B) under this Act; and 

14 ‘‘(C) under any other provision of Federal 

15 law. 

16 ‘‘(g) EXCLUSIVE FEDERAL JURISDICTION.—Partici17 pation in State-sponsored mediation shall not alter, 

18 change, or modify the original exclusive jurisdiction of 

19 United States courts, as set forth in this Act. 

20 ‘‘(h) COST LIMITATION.—Nothing in this section 

21 shall be construed to require the Director or a representa22 tive of the Director to pay additional mediation fees relat23 ing to flood insurance claims associated with a State-spon24 sored mediation program in which such representative of 

25 the Director participates. 


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1 ‘‘(i) EXCEPTION.—In the case of the occurrence of 

2 a major disaster that results in flood damage claims under 

3 the national flood insurance program and that does not 

4 result in any loss covered by a personal lines residential 

5 property insurance policy— 

6 ‘‘(1) this section shall not apply; and 

7 ‘‘(2) the provisions of the Standard Flood In8 surance Policy under the national flood insurance 

9 program and the appeals process established under 

10 section 205 of the Bunning-Bereuter-Blumenauer 

11 Flood Insurance Reform Act of 2004 (42 U.S.C. 

12 4011 note) and the regulations issued pursuant to 

13 such section shall apply exclusively. 

14 ‘‘(j) REPRESENTATIVES OF THE DIRECTOR.—For 

15 purposes of this section, the term ‘representatives of the 

16 Director’ means representatives of the national flood in17 surance program who participate in the appeals process 

18 established under section 205 of the Bunning-Bereuter19 Blumenauer Flood Insurance Reform Act of 2004 (42 

20 U.S.C. 4011 note).’’. 

21 SEC. 23. REITERATION OF FEMA RESPONSIBILITIES UNDER 

22 THE 2004 REFORM ACT. 

23 (a) APPEALS PROCESS.—As required in section 205 

24 of the Bunning-Bereuter-Blumenauer Flood Insurance 

25 Reform Act of 2004 (42 U.S.C. 4011 note), the Director 


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1 shall establish an appeals process through which holders 

2 of a flood insurance policy may appeal the decisions, with 

3 respect to claims, proofs of loss, and loss estimates relat4 ing to such flood insurance policy, of— 

5 (1) any insurance agent or adjuster, or insur6 ance company; or 

7 (2) any employee or contractor of the Federal 

8 Emergency Management Agency. 

9 (b) MINIMUM TRAINING AND EDUCATION REQUIRE10 MENTS.—The Director shall continue to work with the in11 surance industry, State insurance regulators, and other in12 terested parties to implement the minimum training and 

13 education standards for all insurance agents who sell flood 

14 insurance policies, as such standards were determined by 

15 the Director in the notice published in the Federal Reg16 ister on September 1, 2005 (70 Fed. Reg. 52117) pursu17 ant to section 207 of the Bunning-Bereuter-Blumenauer 

18 Flood Insurance Reform Act of 2004 (42 U.S.C. 4011 

19 note). 

20 (c) IMPLEMENTATION REPORTS.— 

21 (1) OVERALL IMPLEMENTATION OF REFORM

22 ACT OF 2004.—Not later than 3 months after the 

23 date of the enactment of this Act, the Director shall 

24 submit a report to the Congress— 


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1 (A) describing the implementation of each 

2 provision of the Bunning-Bereuter-Blumenauer 

3 Flood Insurance Reform Act of 2004 (Public 

4 Law 108–264; 118 Stat. 712); and 

5 (B) identifying each regulation, order, no6 tice, and other material issued by the Director 

7 in implementing each provision of that Act. 

8 (2) IMPLEMENTATION OF APPEALS PROCESS.— 

9 (A) IN GENERAL.—Not later than 30 days 

10 after the date of enactment of this Act, and 

11 every 30 days thereafter until final establish12 ment of the appeals process required under sec13 tion 205 of the Bunning-Bereuter-Blumenauer 

14 Flood Insurance Reform Act of 2004 (42 

15 U.S.C. 4011 note), the Director shall submit a 

16 report to the Congress describing the implemen17 tation of such appeals process. 

18 (B) CONTENT OF REPORT.—Each report 

19 required under subparagraph (A) shall in20 clude— 

21 (i) dates and descriptions of actions 

22 taken by the Director to establish the ap23 peals process; 

24 (ii) dates and descriptions of all com25 munications to the Congress by the DirecVerDate Aug 31 2005 23:50 Jun 28, 2006 Jkt 049200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 E:\BILLS\S3589.RS S3589

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1 tor concerning the establishment of such 

2 process; 

3 (iii) explanations of any statutory or 

4 implied deadlines that have not been met; 

5 and 

6 (iv) an estimate of when any regula7 tion, order, notice, or other material will be 

8 issued by the Director in establishing such 

9 process. 

10 SEC. 24. STUDIES, AUDITS, AND REPORTS. 

11 (a) GAO STUDY ON WRITE YOUR OWN POLICIES.— 

12 Not later than 1 year after the date of enactment of this 

13 Act, the Comptroller General of the United States shall 

14 conduct a study and submit a report to the Committee 

15 on Banking, Housing, and Urban Affairs of the Senate 

16 and the Committee on Financial Services of the House of 

17 Representatives that examines— 

18 (1) the current fees and expenses paid from 

19 premium income earned under the National Flood 

20 Insurance Program to cover the cost of selling, serv21 icing, and processing of claims in connection with 

22 National Flood Insurance Program policies, as well 

23 as floodplain management and mitigation activities, 

24 by— 


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1 (A) companies that are authorized by the 

2 Director to provide Write Your Own policies; 

3 (B) National Flood Insurance Program 

4 contractors; and 

5 (C) the Federal Emergency Management 

6 Agency; 

7 (2) in detail— 

8 (A) each of the 5 other lines of insurance 

9 the National Flood Insurance Program cur10 rently uses to evaluate the amount of reim11 bursement paid to authorized providers of Write 

12 Your Own policies; and 

13 (B) the expenses incurred by such pro14 viders in administering the National Flood In15 surance Program on behalf of the Federal Gov16 ernment; 

17 (3) the cost difference for authorized providers 

18 of Write Your Own policies between— 

19 (A) flood insurance policies at origination 

20 and flood insurance policies up for renewal; and 

21 (B) flood insurance policies written for pol22 icyholders who are required to purchase flood 

23 insurance and flood insurance policies written 

24 for those policyholders who are not required to 

25 purchase flood insurance; 


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1 (4) the similarities and differences in the ex2 penses incurred in administering the National Flood 

3 Insurance Program and those incurred in admin4 istering other lines of Federal, State, and private 

5 company insurance; 

6 (5) in detail what actions the Director is taking 

7 to ensure that authorized providers of Write Your 

8 Own policies are only being reimbursed for their ex9 penses in providing such policies; 

10 (6) in detail the additional benefits authorized 

11 providers of Write Your Own policies receive by not 

12 underwriting flood risk, including the ability to mar13 ket and sell other lines of insurance; and 

14 (7) the feasibility of using a competitive bidding 

15 process, or other alternative, to select 1 or more pri16 vate insurance companies to sell and service Na17 tional Flood Insurance Program policies and process 

18 claims for fees agreed upon by contract with the Di19 rector. 

20 (b) GAO AUDIT.—Not later than 1 year after the 

21 date of enactment of this Act, the Comptroller General 

22 of the United States shall audit the financial transactions 

23 of the National Flood Insurance Program relating to the 

24 consequences of Hurricane Katrina and other hurricanes 

25 of the 2005 season, including any transactions— 


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1 (1) for making any payments required under 

2 section 1334 of the National Flood Insurance Act of 

3 1968 (42 U.S.C. 4054); 

4 (2) to pay reinsurance claims under the excess 

5 loss reinsurance coverage provided under section 

6 1335 of that Act (42 U.S.C. 4055); 

7 (3) to repay to the Secretary of the Treasury 

8 such sums as may have been borrowed from the Sec9 retary in accordance with the authority provided in 

10 section 1309 of that Act (42 U.S.C. 4016); 

11 (4) to the extent approved in appropriations 

12 Acts, to pay any administrative expenses of the Na13 tional Flood Insurance Program; 

14 (5) for the purposes specified in section 

15 1310(d) of that Act (42 U.S.C. 4017(d)) under the 

16 conditions provided in such section; 

17 (6) for carrying out the program under section 

18 1315(b) of that Act (42 U.S.C. 4022(b)); 

19 (7) for transfers to the National Flood Mitiga20 tion Fund, but only to the extent provided in section 

21 1367(b)(1) of that Act (42 U.S.C. 4104d(b)(1)); 

22 (8) for financial assistance under section 1361A 

23 of that Act (42 U.S.C. 4102a) to a State or commu24 nity for taking actions under such section with re25 spect to severe repetitive loss properties, but only to 


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1 the extent provided in section 1361A(i) of that Act; 

2 and 

3 (9) that resulted in amounts being credited to 

4 the National Flood Insurance Program, including 

5 amounts— 

6 (A) borrowed in accordance with the au7 thority provided in section 1309 of that Act (42 

8 U.S.C. 4016); 

9 (B) collected in connection with the excess 

10 loss reinsurance coverage provided under sec11 tion 1335 of that Act (42 U.S.C. 4055); 

12 (C) advanced to the National Flood Insur13 ance Program from appropriations in order to 

14 maintain the National Flood Insurance Fund 

15 established in section 1310 of that Act (42 

16 U.S.C. 4017) in an operative condition ade17 quate to meet the liabilities of the Program; 

18 (D) earned on investments; 

19 (E) required to be paid to the Director 

20 under section 1308(d) of that Act (42 U.S.C. 

21 4015(d)); and 

22 (F) received from any other operation or 

23 activity performed under that Act. 

24 (c) REPORT ON EXPANDING THE NATIONAL FLOOD

25 INSURANCE PROGRAM.—Not later than 1 year after the 


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1 date of the enactment of this Act, the Comptroller General 

2 of the United States shall conduct a study and submit a 

3 report to the Committee on Banking, Housing, and Urban 

4 Affairs of the Senate and the Committee on Financial 

5 Services of the House of Representatives, on— 

6 (1) the number of flood insurance policy holders 

7 currently insuring— 

8 (A) a residential structure up to the max9 imum available coverage amount, as established 

10 in section 61.6 of title 44, Code of Federal Reg11 ulations, of— 

12 (i) $250,000 for the structure; and 

13 (ii) $100,000 for the contents of such 

14 structure; or 

15 (B) a commercial structure up to the max16 imum available coverage amount, as established 

17 in section 61.6 of title 44, Code of Federal Reg18 ulations, of $500,000; 

19 (2) the increased losses the National Flood In20 surance Program would have sustained during the 

21 2004 and 2005 hurricane season if the National 

22 Flood Insurance Program had insured all policy23 holders up to the maximum conforming loan limit 

24 for fiscal year 2006 of $417,000, as established 

25 under section 302(b)(2) of the Federal National 


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1 Mortgage Association Charter Act (12 U.S.C. 

2 1717(b)(2)); 

3 (3) the availability in the private marketplace of 

4 flood insurance coverage in amounts that exceed the 

5 current limits of coverage amounts established in 

6 section 61.6 of title 44, Code of Federal Regula7 tions; and 

8 (4) what effect, if any— 

9 (A) raising the current limits of coverage 

10 amounts established in section 61.6 of title 44, 

11 Code of Federal Regulations, would have on the 

12 ability of private insurers to continue providing 

13 flood insurance coverage; and 

14 (B) reducing the current limits of coverage 

15 amounts established in section 61.6 of title 44, 

16 Code of Federal Regulations, would have on the 

17 ability of private insurers to provide sufficient 

18 flood insurance coverage to effectively replace 

19 the current level of flood insurance coverage 

20 being provided under the National Flood Insur21 ance Program. 

22 (d) REPORT OF THE DIRECTOR ON ACTIVITIES

23 UNDER THE NATIONAL FLOOD INSURANCE PROGRAM.— 

24 (1) IN GENERAL.—The Director shall, on an 

25 annual basis, submit a full report on the operations, 


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1 activities, budget, receipts, and expenditures of the 

2 National Flood Insurance Program for the preceding 

3 12-month period to the Committee on Banking, 

4 Housing, and Urban Affairs of the Senate and the 

5 Committee on Financial Services of the House of 

6 Representatives. 

7 (2) TIMING.—Each report required under para8 graph (1) shall be submitted to the committees de9 scribed in paragraph (1) not later than 3 months 

10 following the end of each fiscal year. 

11 (3) CONTENTS.—Each report required under 

12 paragraph (1) shall include— 

13 (A) the current financial condition and in14 come statement of the National Flood Insur15 ance Fund established under section 1310 of 

16 the National Flood Insurance Act of 1968 (42 

17 U.S.C. 4017), including— 

18 (i) premiums paid into such Fund; 

19 (ii) policy claims against such Fund; 

20 and 

21 (iii) expenses in administering such 

22 Fund; 

23 (B) the number and face value of all poli24 cies issued under the National Flood Insurance 

25 Program that are in force; 


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1 (C) a description and summary of the 

2 losses attributable to repetitive loss structures; 

3 (D) a description and summary of all 

4 losses incurred by the National Flood Insurance 

5 Program due to— 

6 (i) hurricane related damage; and 

7 (ii) nonhurricane related damage; 

8 (E) the amounts made available by the Di9 rector for mitigation assistance under section 

10 1366(e)(5) of the National Flood Insurance Act 

11 of 1968 (42 U.S.C. 4104c(e)(5)) for the pur12 chase of properties substantially damaged by 

13 flood for that fiscal year, and the actual num14 ber of flood damaged properties purchased and 

15 the total cost expended to purchase such prop16 erties; 

17 (F) the estimate of the Director as to the 

18 average historical loss year, and the basis for 

19 that estimate; 

20 (G) the estimate of the Director as to the 

21 maximum amount of claims that the National 

22 Flood Insurance Program would have to expend 

23 in the event of a catastrophic year; 

24 (H) the average— 


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1 (i) amount of insurance carried per 

2 flood insurance policy; 

3 (ii) premium per flood insurance pol4 icy; and 

5 (iii) loss per flood insurance policy; 

6 and 

7 (I) the number of claims involving dam8 ages in excess of the maximum amount of flood 

9 insurance available under the National Flood 

10 Insurance Program and the sum of the amount 

11 of all damages in excess of such amount. 

12 (e) GAO ANALYSIS AND EVALUATION OF THE NA13 TIONAL FLOOD INSURANCE PROGRAM.— 

14 (1) IN GENERAL.—Not later than 1 year after 

15 the date of enactment of this Act, the Comptroller 

16 General of the United States shall submit a report 

17 evaluating the purposes of the National Flood Insur18 ance Program to the Committee on Banking, Hous19 ing, and Urban Affairs of the Senate and the Com20 mittee on Financial Services of the House of Rep21 resentatives. 

22 (2) CONTENTS.—The report required under 

23 paragraph (1) shall include— 

24 (A) an analysis of whether the National 

25 Flood Insurance Program has fulfilled its purVerDate Aug 31 2005 23:50 Jun 28, 2006 Jkt 049200 PO 00000 Frm 00050 Fmt 6652 Sfmt 6201 E:\BILLS\S3589.RS S3589

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1 pose, as set forth in section 1302 of the Na2 tional Flood Insurance Act of 1968 (42 U.S.C. 

3 4001); 

4 (B) an examination of whether the Na5 tional Flood Insurance Program has unduly 

6 burdened or benefitted taxpayers; and 

7 (C) any recommendations for legislative or 

8 administrative action that the Comptroller Gen9 eral determines are necessary to ensure that the 

10 National Flood Insurance Program operates in 

11 a more effective and efficient manner, including 

12 whether the National Flood Insurance Program 

13 should be reorganized into another Federal 

14 agency. 

15 (f) GAO STUDY.—Not later than 1 year after the 

16 date of the enactment of this Act, the Comptroller General 

17 of the United States shall conduct a study and submit a 

18 report to the Committee on Banking, Housing, and Urban 

19 Affairs of the Senate and the Committee on Financial 

20 Services of the House of Representatives, on the— 

21 (1) composition of the remaining pre-FIRM 

22 structures that are explicitly receiving discounted 

23 premium rates under section 1307 of the National 

24 Flood Insurance Act of 1968 (42 U.S.C. 4104), in25 cluding the historical basis for the receipt of such 


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1 subsidy and whether such subsidy has outlasted its 

2 purpose; 

3 (2) number and fair market value of such struc4 tures; 

5 (3) respective income level of each owner of 

6 such structure; 

7 (4) number of times each such structure has 

8 been sold since 1968, including specific dates, sales 

9 price, and any other information the Secretary de10 termines appropriate; 

11 (5) total losses incurred by such structures 

12 since the establishment of the National Flood Insur13 ance Program compared to the total losses incurred 

14 by all structures that are charged a nondiscounted 

15 premium rate; 

16 (6) total cost of foregone premiums since the 

17 establishment of the National Flood Insurance Pro18 gram, as a result of the subsidies provided to such 

19 structures; 

20 (7) annual cost to the taxpayer, as a result of 

21 the subsidies provided to such structures; 

22 (8) the premium income collected and the losses 

23 incurred by the National Flood Insurance Program 

24 as a result of such explicitly subsidized structures 

25 compared to the premium income collected and the 


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1 losses incurred by such Program as result of struc2 tures that are charged a nondiscounted premium 

3 rate, on a State-by-State basis; and 

4 (9) the most efficient way to eliminate the sub5 sidy to such structures. 

6 (g) GAO STUDY ON DIRECT PURCHASE IN NON7 PARTICIPATING COMMUNITIES.—Not later than 1 year 

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

9 General of the United States shall conduct a study and 

10 submit a report to the Committee on Banking, Housing, 

11 and Urban Affairs of the Senate and the Committee on 

12 Financial Services of the House of Representatives, on the 

13 feasibility of allowing individuals, residing in communities 

14 not currently participating in the National Flood Insur15 ance Program, to purchase flood insurance from the Na16 tional Flood Insurance Program on an actuarially sound 

17 basis. 


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Calendar No. 498 

109TH CONGRESS 

2D SESSION S. 3589 

[Report No. 109

–271] 

A BILL 

To amend the National Flood Insurance Act of 

flood insurance fund, and for other purposes. 1968, to restore the financial solvency of the 

JUNE 28, 2006 

Read twice and placed on the calendar 


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