Taxpayer Exposure Mitigation Act of 2017

To repeal the mandatory flood insurance coverage requirement for commercial properties located in flood hazard areas and to provide for greater transfer of risk under the National Flood Insurance Program to private capital and reinsurance markets, and for other purposes. 1. Short title This Act may be cited as the Taxpayer Exposure Mitigation Act of 2017 2. Opt-out of mandatory coverage requirement for commercial properties (a) Amendments to Flood Disaster Protection Act of 1973 The Flood Disaster Protection Act of 1973 is amended— (1) in section 3(a) ( 42 U.S.C. 4003(a) (A) in paragraph (10), by striking and (B) in paragraph (11), by striking the period at the end and inserting ; and (C) by adding at the end the following new paragraph: (12) residential improved real estate (A) is primarily used for residential purposes, as defined by the Federal entities for lending regulation; and (B) secures financing or financial assistance provided through a federally related single family loan progam, as defined by the Federal entities for lending regulation. ; and (2) in section 102 ( 42 U.S.C. 4012a (A) in subsection (b)— (i) in paragraph (1)(A)— (I) by inserting residential improved real estate (II) by inserting residential building or mobile home (ii) in paragraph (2)— (I) by inserting residential improved real estate (II) by inserting residential building or mobile home (iii) in paragraph (3)— (I) in subparagraph (A), by inserting residential improved real estate (II) in the matter after and below subparagraph (B), by inserting residential building or mobile home (B) in subsection (c)(3), by striking , in the case of any residential property, for any structure that is a part of such property for any structure that is part of a residential property (C) in subsection (e)— (i) in paragraph (1)— (I) by inserting residential improved real estate (II) by inserting residential building or mobile home (ii) in paragraph (5)— (I) in subparagraph (A)— (aa) by inserting residential improved real estate (bb) by inserting residential building or mobile home (II) in subparagraph (B), by inserting residential building or mobile home (III) in subparagraph (C), by inserting residential building or mobile home (D) in subsection (h)— (i) by inserting residential improved real estate (ii) in the matter preceding paragraph (1), by inserting residential building or mobile home (b) Amendments to National Flood Insurance Act of 1968 The National Flood Insurance Act of 1968 is amended— (1) in section 1364(a) ( 42 U.S.C. 4104a(a) (A) in paragraph (1), by inserting residential improved real estate (B) in paragraph (2), by inserting residential improved real estate (C) in paragraph (3)(A), by inserting residential building (2) in section 1365 ( 42 U.S.C. 4104b (A) in subsection (a)— (i) by inserting residential improved real estate (ii) by inserting residential building (B) in subsection (b)(2)— (i) by inserting residential building (ii) by inserting residential improved real estate (C) in subsection (d), by inserting residential improved real estate (D) in subsection (e)— (i) by inserting residential improved real estate (ii) by inserting residential building (3) in section 1370 ( 42 U.S.C. 4121 (A) in paragraph (8), by inserting residential improved real estate (B) by redesignating paragraphs (14) and (15) as paragraphs (15) and (16), respectively; and (C) by inserting after paragraph (13) the following new paragraph: (14) the term residential improved real estate (A) is primarily used for residential purposes, as defined by the Federal entities for lending regulation; and (B) secures financing or financial assistance provided through a federally related single family loan progam, as defined by the Federal entities for lending regulation; . (c) Rule of construction This section and the amendments made by this section may not be construed to prohibit the Administrator of the Federal Emergency Management Agency from offering flood insurance coverage under the National Flood Insurance Program for eligible non-residential properties, other residential multifamily properties, or structures financed with commercial loans, or to prohibit the purchase of such coverage for such eligible properties. 3. Risk transfer requirement Subsection (e) of section 1345 of the National Flood Insurance Act of 1968 ( 42 U.S.C. 4081(e) (1) by striking (e) Risk transfer. (e) Risk transfer (1) Authority The Administrator ; and (2) by adding at the end the following new paragraph: (2) Required risk transfer coverage (A) Requirement Not later than the expiration of the 18-month period beginning upon the date of the enactment of this paragraph and at all times thereafter, the Administrator shall annually cede a portion of the risk of the flood insurance program under this title to the private reinsurance or capital markets, or any combination thereof, and at rates and terms that the Administrator determines to be reasonable and appropriate, in an amount that— (i) is sufficient to maintain the ability of the program to pay claims; and (ii) manages and limits the annual exposure of the flood insurance program to flood losses in accordance with the probable maximum loss target established for such year under subparagraph (B). (B) Probable maximum loss target The Administrator shall for each fiscal year, establish a probable maximum loss target for the national flood insurance program that shall be the maximum probable loss under the national flood insurance program that is expected to occur in such fiscal year. (C) Considerations In establishing the probable maximum loss target under subparagraph (B) for each fiscal year and carrying out subparagraph (A), the Administrator shall consider— (i) the probable maximum loss targets for other United States public natural catastrophe insurance programs, including as State wind pools and earthquake programs; (ii) the probable maximum loss targets of other risk management organizations, including the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation; (iii) catastrophic, actuarial, and other appropriate data modeling results of the national flood insurance program portfolio; (iv) the availability of funds in the National Flood Insurance Fund established under section 1310 ( 42 U.S.C. 4017 (v) the availability of funds in the National Flood Insurance Reserve Fund established under section 1310A ( 42 U.S.C. 4017a (vi) the availability of borrowing authority under section 1309 ( 42 U.S.C. 4016 (vii) the ability of the Administrator to repay outstanding debt; (viii) amounts appropriated to the Administrator to carry out the national flood insurance program; (ix) reinsurance, capital markets, catastrophe bonds, collateralized reinsurance, resilience bonds, and other insurance-linked securities, and other risk transfer opportunities; and (x) any other factor the Administrator determines appropriate. (D) Multi-year contracts Nothing in this paragraph may be construed to prevent or prohibit the Administrator from complying with the requirement under subparagraph (A) regarding ceding risk through contracts having a duration longer than one year. . 4. Community flood maps (a) Technical Mapping Advisory Council Section 100215 of the Biggert-Waters Flood Insurance Reform Act of 2012 ( 42 U.S.C. 4101a (1) in subsection (c)— (A) in paragraph (5)(B), by striking and (B) by redesignating paragraph (6) as paragraph (9); and (C) by inserting after paragraph (5) the following new paragraphs: (6) recommend to the Administrator methods or actions to make the flood mapping processes more efficient; (7) recommend to the Administrator methods or actions to minimize any cost, data, and paperwork requirements of the flood mapping processes; (8) assist communities, and in particular smaller communities, in locating the resources required to participate in the development of flood elevations and flood hazard area designations; and ; and (2) by adding at the end the following new subsection: (m) Community flood maps (1) Standards and procedures In addition to the other duties of the Council under this section, not later than the expiration of the 12-month period beginning on the date of the enactment of this subsection, the Council shall recommend to the Administrator standards and requirements for chief executive officers, or entities designated by chief executive officers, of States and communities participating in the National Flood Insurance Program to use in mapping flood hazards located in States and communities that choose to develop alternative maps to the flood insurance rate maps developed by the Agency. The recommended standards and requirements shall include procedures for providing notification and appeal rights to individuals within the communities of the proposed flood elevation determinations. (2) Exemption from rulemaking Until such time as the Administrator promulgates regulations implementing paragraph (1) of this subsection, the Administrator may, notwithstanding any other provision of law, adopt policies and procedures necessary to implement such paragraphs without undergoing notice and comment rulemaking and without conducting regulatory analyses otherwise required by statute, regulation, or executive order. . (b) FEMA identification of flood-prone areas Subsection (a) of section 1360 of the National Flood Insurance Act of 1968 ( 42 U.S.C. 4101(a) (1) in paragraph (2), by striking the period at the end and inserting ; and (2) by redesignating paragraphs (1) and (2) as subparagraphs (A), and (B), respectively, and realigning such subparagraphs so as to be indented 4 ems from the left margin; (3) by striking is authorized to consult is authorized— (1) to consult ; (4) by adding at the end the following new paragraph: (2) to receive proposed alternative maps from communities developed pursuant to standards and requirements recommended by the Technical Mapping Advisory Council, as required by section 100215(m) of the Biggert-Waters Flood Insurance Reform Act of 2012 ( 42 U.S.C. 4101a(m) 42 U.S.C. 4101b(c)(3) (A) publish information with respect to all flood plain areas, including coastal areas located in the United States, which have special flood hazards, and (B) establish or update flood-risk zone data in all such areas, and make estimates with respect to the rates of probable flood caused loss for the various flood risk zones for each of these areas until the date specified in section 1319. . (c) National Flood Mapping Program Section 100216 of the Biggert-Waters Flood Insurance Reform Act of 2012 ( 42 U.S.C. 4101b (1) in subsection (a), by inserting prepared by the Administrator, or by a community pursuant to section 1360(a)(2) of the National Flood Insurance Act of 1968, Program rate maps (2) in subsection (c)— (A) in paragraph (1)(B), by striking and (B) in paragraph (2)(C), by striking the period at the end and inserting a semicolon; and (C) by adding at the end the following new paragraphs: (3) establish and adopt standards and requirements for development by States and communities of alternative flood insurance rate maps to be submitted to the Administrator pursuant to section 1360(a)(2) of the National Flood Insurance Act of 1968, taking into consideration the recommendations of the Technical Mapping Advisory Council made pursuant to section 100215(m) of this Act ( 42 U.S.C. 4101a(m) (4) in the case of proposed alternative maps received by the Administrator pursuant to such section 1360(a)(2), not later than the expiration of the 6-month period beginning upon receipt of such proposed alternative maps— (A) determine whether such maps were developed in accordance with the standards and requirements adopted pursuant to paragraph (3) of this subsection; and (B) approve or disapprove such proposed maps for use under National Flood Insurance Program. ; and (3) in subsection (d)(1), by inserting maximum 30-day period July 25, 2017 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed

Summary: Taxpayer Exposure Mitigation Act of 2017 This bill amends the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973 to limit the required purchase of flood insurance in certain circumstances to only residential properties (currently, the requirement applies to all types of property). It also requires the Federal Emergency Management Agency (FEMA) to annually transfer a portion of the risk from the National Flood Insurance Program (NFIP) to private reinsurance or capital markets. The amount of transferred risk must be based on a probable maximum loss target for NFIP established by FEMA each fiscal year. The bill amends the Biggert-Waters Flood Insurance Reform Act of 2012 to require FEMA to establish standards for the development of alternative flood insurance rate maps by local and state governments. FEMA must consider recommendations made by the Technical Mapping Advisory Council when establishing these standards. FEMA must approve the use of these alternative maps under NFIP.