IB 
Union Calendar No. 152
108TH CONGRESS 
1ST SESSION 
H. R. 253
[Report No. 108–266] 
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 HOUSE OF REPRESENTATIVES 
JANUARY 8, 2003
Mr. BEREUTER (for himself and Mr. BLUMENAUER) introduced the following 
bill; which was referred to the Committee on Financial Services 
SEPTEMBER 5, 2003
Additional sponsors: Mr. PETRI, Mr. FROST, and Mr. TERRY 
SEPTEMBER 5, 2003 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on January 8, 2003] 
A BILL 
To amend the National Flood Insurance Act of 1968 to 
reduce losses to properties for which repetitive flood in-
surance claim payments have been made.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Two Floods and You 
Are Out of the Taxpayers’ Pocket Act of 2003’’. 
SEC. 2. CONGRESSIONAL FINDINGS. 
The Congress finds that—
(1) the national flood insurance program (A) 
identifies the flood risk, (B) provides flood risk infor-
mation to the public, (C) encourages State and local 
governments to make appropriate land use adjust-
ments to constrict the development of land which is 
exposed to flood damage and minimize damage caused 
by flood losses, and (D) makes flood insurance avail-
able on a nationwide basis that would otherwise not 
be available, to accelerate recovery from floods, miti-
gate future losses, save lives, and reduce the personal 
and national costs of flood disasters; 
(2) the national flood insurance program insures 
approximately 4,400,000 policyholders; 
(3) approximately 48,000 properties currently 
insured under the program have experienced, within 
a 10-year period, two or more flood losses where each 
such loss exceeds the amount $1,000; 
(4) approximately 10,000 of these repetitive-loss 
properties have experienced either two or three losses 
that cumulatively exceed building value or four or 
more losses, each exceeding $1,000;
(5) repetitive-loss properties constitute a signifi-
cant drain on the resources of the national flood in-
surance program, costing about $200,000,000 annu-
ally; 
(6) repetitive-loss properties comprise approxi-
mately one percent of currently insured properties but 
are expected to account for 25 to 30 percent of claims 
losses; 
(7) the vast majority of repetitive-loss properties 
were built before local community implementation of 
floodplain management standards under the program 
and thus are eligible for subsidized flood insurance; 
(8) while some property owners take advantage 
of the program allowing subsidized flood insurance 
without requiring mitigation action, others are 
trapped in a vicious cycle of suffering flooding, then 
repairing flood damage, then suffering flooding, with-
out the means to mitigate losses or move out of harm’s 
way; 
(9) 
mitigation 
of 
repetitive-loss 
properties 
through buyouts, elevations, relocations, or flood-
proofing will produce savings for policyholders under 
the program and for Federal taxpayers through re-
duced flood insurance losses and reduced Federal dis-
aster assistance;
(10) a strategy of making mitigation offers 
aimed at high-priority repetitive-loss properties and 
shifting more of the burden of recovery costs to prop-
erty owners who choose to remain vulnerable to repet-
itive flood damage can encourage property owners to 
take appropriate actions that reduce loss of life and 
property damage and benefit the financial soundness 
of the program; and 
(11) the method for addressing repetitive-loss 
properties should be flexible enough to take into con-
sideration legitimate circumstances that may prevent 
an owner from taking a mitigation action. 
SEC. 3. EXTENSION OF PROGRAM AND CONSOLIDATION OF 
AUTHORIZATIONS. 
The National Flood Insurance Act of 1968 is amended 
as follows: 
(1) BORROWING AUTHORITY.—In the first sen-
tence of section 1309(a) (42 U.S.C. 4016(a)), by strik-
ing ‘‘through December’’ and all that follows through 
‘‘, and’’ and inserting the following: ‘‘through the date 
specified in section 1319, and’’. 
(2) AUTHORITY
FOR
CONTRACTS.—In section 
1319 (42 U.S.C. 4026), by striking ‘‘after’’ and all 
that follows and inserting ‘‘after September 30, 
2008.’’.
(3) EMERGENCY
IMPLEMENTATION.—In section 
1336(a) (42 U.S.C. 4056(a)), by striking ‘‘during the 
period’’ and all that follows through ‘‘in accordance’’ 
and inserting ‘‘during the period ending on the date 
specified in section 1319, in accordance’’. 
(4) AUTHORIZATION
OF
APPROPRIATIONS
FOR 
STUDIES.—In section 1376(c) (42 U.S.C. 4127(c)), by 
striking ‘‘through’’ and all that follows and inserting 
the following: ‘‘through the date specified in section 
1319, for studies under this title.’’. 
SEC. 4. ESTABLISHMENT OF PILOT PROGRAM FOR MITIGA-
TION OF SEVERE REPETITIVE LOSS PROP-
ERTIES. 
(a) IN GENERAL.—The National Flood Insurance Act 
of 1968 is amended by inserting after section 1361 (42 
U.S.C. 4102) the following new section: 
‘‘PILOT PROGRAM FOR MITIGATION OF SEVERE REPETITIVE 
LOSS PROPERTIES 
‘‘SEC. 1362. (a) AUTHORITY.—To the extent amounts 
are made available for use under this section, the Director 
may, subject to the limitations of this section, provide fi-
nancial assistance to States and communities for taking ac-
tions with respect to severe repetitive loss properties (as 
such term is defined in subsection (b)) to mitigate flood 
damage to such properties and losses to the National Flood 
Insurance Fund from such properties.
‘‘(b) SEVERE REPETITIVE LOSS PROPERTY.—For pur-
poses of this section, the term ‘severe repetitive loss prop-
erty’ has the following meaning: 
‘‘(1) SINGLE-FAMILY PROPERTIES.—In the case 
of a property consisting of one to four residences, such 
term means a property that—
‘‘(A) is covered under a contract for flood 
insurance made available under this title; and 
‘‘(B) has incurred flood-related damage—
‘‘(i) for which four or more separate 
claims payments have been made under 
flood insurance coverage under this title be-
fore the date of the enactment of the Two 
Floods and You Are Out of the Taxpayers’ 
Pocket Act of 2003, with the amount of each 
such claim exceeding $5,000, and with the 
cumulative amount of such claims pay-
ments exceeding $20,000; 
‘‘(ii) for which four or more separate 
claims payments have been made under 
flood insurance coverage under this title 
after the date of the enactment of the Two 
Floods and You Are Out of the Taxpayers’ 
Pocket Act of 2003, with the amount of each 
such claim exceeding $3,000, and with the
cumulative amount of such claims pay-
ments exceeding $15,000; or 
‘‘(iii) for which at least two separate 
claims payments have been made under 
such coverage, with the cumulative amount 
of such claims exceeding the value of the 
property. 
‘‘(2) MULTIFAMILY PROPERTIES.—In the case of 
a property consisting of five or more residences, such 
term shall have such meaning as the Director shall by 
regulation provide. 
‘‘(c) ELIGIBLE ACTIVITIES.—Amounts provided under 
this section to a State or community may be used only for 
the following activities: 
‘‘(1) MITIGATION
ACTIVITIES.—To carry out 
mitigation activities that reduce flood damages to se-
vere repetitive loss properties, including elevation, re-
location, demolition, and floodproofing of structures, 
and minor physical localized flood control projects. 
‘‘(2) PURCHASE.—To purchase severe repetitive 
loss properties, subject to subsection (f). 
‘‘(d) MATCHING REQUIREMENT.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the Director may not provide assistance 
under this section to a State or community in an
amount exceeding 3 times the amount that the State 
or community certifies, as the Director shall require, 
that the State or community will contribute from 
non-Federal funds for carrying out the eligible activi-
ties to be funded with such assistance amounts. 
‘‘(2) WAIVER.—
‘‘(A) AUTHORITY.—Subject to subparagraph 
(B), the Director may waive the limitation 
under paragraph (1) for any State, and for the 
communities located in that State, with respect 
to a year, if, for such year—
‘‘(i) 5 percent or more of the total 
number of severe repetitive loss properties 
in the United States are located in such 
State; and 
‘‘(ii) the State submits a plan to the 
Director specifying how the State intends to 
reduce the number of severe repetitive loss 
properties and the Director determines, 
after consultation with State and technical 
experts, that the State has taken actions to 
reduce the number of such properties. 
‘‘(B) LIMITATION.—In each waiver under 
subparagraph (A), the Director may waive the 
limitation under paragraph (1) only to the ex-
tent that the State or community involved is re-
quired to contribute, for each severe repetitive 
loss property for which grant amounts are pro-
vided, not less than 10 percent of the cost of the 
activities for such properties that are to be fund-
ed with grant amounts. 
‘‘(3) NON-FEDERAL
FUNDS.—For purposes of 
this subsection, the term ‘non-Federal funds’ includes 
State or local agency funds, in-kind contributions, 
any salary paid to staff to carry out the eligible ac-
tivities of the recipient, the value of the time and 
services contributed by volunteers to carry out such 
activities (at a rate determined by the Director), and 
the value of any donated material or building and the 
value of any lease on a building. 
‘‘(e) STANDARDS FOR MITIGATION OFFERS.—The pro-
gram under this section for providing assistance for eligible 
activities for severe repetitive loss properties shall be subject 
to the following limitations: 
‘‘(1) PRIORITY.—In determining the properties 
for which to provide assistance for eligible activities 
under subsection (c), the Director shall provide assist-
ance for properties in the order that will result in the 
greatest amount of savings to the National Flood In-
surance Fund in the shortest period of time.
‘‘(2) OFFERS.—The Director shall provide assist-
ance in a manner that permits States and commu-
nities to make offers to owners of severe repetitive loss 
properties to take eligible activities under subsection 
(c) as soon as is practicable. 
‘‘(3) NOTICE.—Upon making an offer to provide 
assistance with respect to a property for any eligible 
activity under subsection (c), the State or community 
shall notify each holder of a recorded interest on the 
property of such offer and activity. 
‘‘(f) PURCHASE OFFERS.—A State or community may 
take action under subsection (c)(2) to purchase a severe re-
petitive loss property only if the following requirements are 
met: 
‘‘(1) USE OF PROPERTY.—The State or commu-
nity enters into an agreement with the Director that 
provides assurances that the property purchased will 
be used in a manner that is consistent with the re-
quirements of clauses (i) and (ii) of section 
404(b)(2)(B) of the Robert T. Stafford Disaster Relief 
and 
Emergency 
Assistance 
Act 
(42 
U.S.C. 
5170c(b)(2)(B)) for properties acquired, accepted, or 
from which a structure will be removed pursuant to 
a project provided property acquisition and relocation 
assistance under such section 404(b).
(or subdivision thereof) under section 1307(a)(1) 
and apply appropriate loss deductibles. 
‘‘(2) APPEALS.—
‘‘(A) IN GENERAL.—Any owner of a severe 
repetitive loss property may appeal a determina-
tion of the Director to take action under para-
graph (1)(B) with respect to such property, 
based only upon the following grounds: 
‘‘(i) As a result of such action, the 
owner of the property will not be able to 
purchase a replacement primary residence 
of comparable value and that is function-
ally equivalent. 
‘‘(ii) As a result of such action, the 
preservation or maintenance of any pre-
historic or historic district, site, building, 
structure, or object included in, or eligible 
for inclusion in, the National Register of 
historic places will be interfered with, im-
paired, or disrupted. 
‘‘(iii) The flooding that resulted in the 
flood insurance claims described in sub-
section (b)(2) for the property resulted from 
significant actions by a third party in vio-
lation of Federal, State, or local law, ordi-
nance, or regulation. 
‘‘(iv) In purchasing the property, the 
owner relied upon flood insurance rate 
maps of the Federal Emergency Manage-
ment Agency that were current at the time 
and did not indicate that the property was 
located in an area having special flood haz-
ards. 
‘‘(B) PROCEDURE.—An appeal under this 
paragraph of a determination of the Director 
shall be made by filing, with the Director, a re-
quest for an appeal within 90 days after receiv-
ing notice of such determination. Upon receiving 
the request, the Director shall select, from a list 
of independent third parties compiled by the Di-
rector for such purpose, a party to hear such ap-
peal. Within 90 days after filing of the request 
for the appeal, such third party shall review the 
determination of the Director and shall set aside 
such determination if the third party determines 
that the grounds under subparagraph (A) exist. 
During the pendency of an appeal under this 
paragraph, the Director shall stay the applica-
bility of the rates established pursuant to para-
graph (1). 
‘‘(C) EFFECT OF FINAL DETERMINATION.—
In an appeal under this paragraph—
‘‘(i) if a final determination is made 
that the grounds under subparagraph (A) 
exist, the third party hearing such appeal 
shall make a determination of how much to 
reduce the chargeable risk premium rate for 
flood insurance coverage for the property in-
volved in the appeal from the amount re-
quired under paragraph (1) and the Direc-
tor shall promptly reduce the chargeable 
risk premium rate for such property by 
such amount; and 
‘‘(ii) if a final determination is made 
that the grounds under subparagraph (A) 
do not exist, the Director shall promptly in-
crease the chargeable risk premium rate for 
such property to the amount established 
pursuant to paragraph (1) and shall collect 
from the property owner the amount nec-
essary to cover the stay of the applicability 
of such increased rates during the pendency 
of the appeal.
‘‘(D) COSTS.—If the third party hearing an 
appeal under this paragraph is compensated for 
such service, the costs of such compensation shall 
be borne—
‘‘(i) by the owner of the property re-
questing the appeal, if the final determina-
tion in the appeal is that the grounds under 
subparagraph (A) do not exist; and 
‘‘(ii) by the National Flood Insurance 
Fund, if such final determination is that 
the grounds under subparagraph (A) do 
exist. 
‘‘(E) REPORT.—Not later than 6 months 
after the date of the enactment of the Two Floods 
and You Are Out of the Taxpayers’ Pocket Act 
of 2003, the Director shall submit a report to the 
House of Representatives and the Senate describ-
ing the rules, procedures, and administration for 
appeals under this paragraph. 
‘‘(h) DISCRETIONARY ACTIONS IN CASES OF FRAUDU-
LENT CLAIMS.—If the Director determines that a fraudu-
lent claim was made under flood insurance coverage under 
this title for a severe repetitive loss property, the Director 
may—
‘‘(1) cancel the policy and deny the provision to 
such policyholder of any new flood insurance coverage 
under this title for the property; or 
‘‘(2) refuse to renew the policy with such policy-
holder upon expiration and deny the provision of any 
new flood insurance coverage under this title to such 
policyholder for the property. 
‘‘(i) FUNDING.—Pursuant to section 1310(a)(8), the 
Director may use amounts from the National Flood Insur-
ance Fund to provide assistance under this section in each 
of fiscal years 2004, 2005, 2006, 2007, and 2008, except 
that the amount so used in each such fiscal year may not 
exceed $40,000,000 and shall remain available until ex-
pended. Notwithstanding any other provision of this title, 
amounts made available pursuant to this subsection shall 
not be subject to offsetting collections through premium 
rates for flood insurance coverage under this title. 
‘‘(j) TERMINATION.—The Director may not provide as-
sistance under this section to any State or community after 
September 30, 2008.’’. 
(b) AVAILABILITY OF NATIONAL FLOOD INSURANCE 
FUND AMOUNTS.—Section 1310(a) of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4017(a)) is amended—
(1) in paragraph (7), by striking ‘‘and’’ at the 
end; and
(2) by striking paragraph (8) and inserting the 
following new paragraph: 
‘‘(8) for financial assistance under section 1362 
to States and communities for taking actions under 
such section with respect to severe repetitive loss prop-
erties, but only to the extent provided in section 
1362(i); and’’. 
SEC. 5. ENHANCED AUTHORITY IN FLOOD MITIGATION AS-
SISTANCE PROGRAM. 
(a) MITIGATION ASSISTANCE FOR REPETITIVE CLAIMS 
PROPERTIES.—Section 1366(e) of the National Flood In-
surance Act of 1968 (42 U.S.C. 4104c) is amended—
(1) by striking paragraph (4) and inserting the 
following new paragraph: 
‘‘(4) STANDARD FOR ASSISTANCE.—In providing 
grants under this subsection for mitigation activities, 
the Director shall give first priority for funding to re-
petitive claims properties, or to such subsets of such 
properties as the Director may establish pursuant to 
subsection (n)(2), that the Director determines are the 
most cost-effective for the taxpayers of the United 
States, are in the best interests of the National Flood 
Insurance Fund, and for which matching amounts 
under subsection (f) are available.’’; and
(2) by adding at the end the following new para-
graph: 
‘‘(6) NOTICE.—Upon making an offer to conduct 
any eligible mitigation activity under paragraph (5) 
with respect to a repetitive claims property or a se-
vere repetitive loss property (as such term is defined 
in section 1362(b)) using amounts provided under 
this section, the State or community shall notify each 
holder of a recorded interest on the property of such 
offer and activity.’’. 
(b) LIMITATIONS ON PROPERTY ACQUISITION.—Sec-
tion 1366(e)(5)(C) of the National Flood Insurance Act of 
1968 (42 U.S.C. 4104c(e)(5)(C)) is amended by striking 
‘‘for public use, as the Director determines is consistent with 
sound land management and use in such area’’ and insert-
ing the following: ‘‘except that amounts provided under this 
section may not be used for acquisition of any property un-
less—
‘‘(i) the State or community enters 
into an agreement with the Director that 
provides assurances that the property pur-
chased will be used in a manner that is 
consistent with the requirements of clauses 
(i) and (ii) of section 404(b)(2)(B) of the 
Robert T. Stafford Disaster Relief and
Emergency 
Assistance 
Act 
(42 
U.S.C. 
5170c(b)(2)(B)) for properties acquired, ac-
cepted, or from which a structure will be re-
moved pursuant to a project provided prop-
erty acquisition and relocation assistance 
under such section 404(b); and 
‘‘(ii) the amount of purchase offer is 
not less than the greatest of—
‘‘(I) the amount of the original 
purchase price of the property, when 
purchased by the holder of the current 
policy of flood insurance under this 
title; 
‘‘(II) the total amount owed, at 
the time the offer to purchase is made, 
under any loan secured by a recorded 
interest on the property; and 
‘‘(III) an amount equal to the fair 
market value of the property imme-
diately before the most recent flood 
event affecting the property’’. 
(c) WAIVER OF LIMITATIONS ON ASSISTANCE.—Sec-
tion 1366(f) of the National Flood Insurance Act of 1968 
(42 U.S.C. 4104c(f)) is amended by striking paragraph (3) 
and inserting the following new paragraph:
‘‘(3) WAIVER.—The Director may waive the dol-
lar amount limitations under paragraphs (1) and (2) 
for any State or community—
‘‘(A) for any 5-year period when a major 
disaster or emergency declared by the President 
(pursuant to the Robert T. Stafford Disaster Re-
lief and Emergency Assistance Act (42 U.S.C. 
5121 et seq.)) as a result of flood conditions is 
in effect with respect to areas in the State or 
community; or 
‘‘(B) whenever the Director determines that 
repetitive claims properties are located within 
such State or community and that waiver of the 
cost limitations is cost-effective and in the best 
interests of the National Flood Insurance 
Fund.’’. 
(d) PENALTIES
FOR REFUSAL
TO MITIGATE
AND 
FRAUDULENT CLAIMS.—Section 1366 of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4104c) is amended—
(1) by striking subsection (k); 
(2) by redesignating subsection (j) as subsection 
(l); and 
(3) by inserting after subsection (i) the following 
new subsections:
‘‘(j) INCREASE TO ACTUARIAL RATES IN CASES OF RE-
FUSAL TO MITIGATE.—
‘‘(1) IN GENERAL.—In any case in which the 
owner of a repetitive claims property refuses an offer 
of a State or community to conduct, with respect to 
such property, mitigation activities under subsection 
(e) under a mitigation plan approved by the Director, 
the Director shall—
‘‘(A) notify each holder of a recorded inter-
est on the property of such refusal; and 
‘‘(B) increase the chargeable risk premium 
rate for flood insurance coverage under this title 
for the property to an amount equal to the appli-
cable estimated risk premium rate for such area 
(or subdivision thereof) under section 1307(a)(1) 
and apply appropriate loss deductibles. 
‘‘(2) APPEALS.—
‘‘(A) MITIGATION ACTIONS.—Any owner of 
a repetitive claims property may appeal a deter-
mination of the Director to take action under 
paragraph (1)(B) with respect to such property, 
based only upon the following grounds: 
‘‘(i) As a result of such action, the 
owner of the property will not be able to 
purchase a replacement primary residence
of comparable value and that is function-
ally equivalent. 
‘‘(ii) As a result of such action, the 
preservation or maintenance of any pre-
historic or historic district, site, building, 
structure, or object included in, or eligible 
for inclusion in, the National Register of 
historic places will be interfered with, im-
paired, or disrupted. 
‘‘(iii) The flooding that resulted in the 
flood insurance claims payments described 
in subsection (n)(2) for the property re-
sulted from significant actions by a third 
party in violation of Federal, State, or local 
law, ordinance, or regulation. 
‘‘(iv) In purchasing the property, the 
owner relied upon flood insurance rate 
maps of the Federal Emergency Manage-
ment Agency that were current at the time 
and did not indicate that the property was 
located in an area having special flood haz-
ards. 
‘‘(B) PROCEDURE.—An appeal under this 
paragraph of a determination of the Director 
shall be made by filing, with the Director, a re-
quest for an appeal within 90 days after receiv-
ing notice of such determination. Upon receiving 
the request, the Director shall select, from a list 
of independent third parties compiled by the Di-
rector for such purpose, a party to hear such ap-
peal. Within 90 days after filing of the request 
for the appeal, such third party shall review the 
determination of the Director and shall set aside 
such determination if the third party determines 
that the grounds under subparagraph (A) exist. 
During the pendency of an appeal under this 
paragraph, the Director shall stay the applica-
bility of the rates established pursuant to para-
graph (1). 
‘‘(C) EFFECT OF FINAL DETERMINATION.—
In an appeal under this paragraph—
‘‘(i) if a final determination is made 
that the grounds under subparagraph (A) 
exist, the third party hearing such appeal 
shall make a determination of how much to 
reduce the chargeable risk premium rate for 
flood insurance coverage for the property in-
volved in the appeal from the amount re-
quired under paragraph (1) and the Direc-
tor shall promptly reduce the chargeable
Insurance Act of 1968 (42 U.S.C. 4017(a)) is amended by 
adding at the end the following new paragraph: 
‘‘(9) for funding, not to exceed $10,000,000 in 
any fiscal year, for mitigation actions under section 
1323, except that, notwithstanding any other provi-
sion of this title, amounts made available pursuant to 
this paragraph shall not be subject to offsetting collec-
tions through premium rates for flood insurance cov-
erage under this title.’’. 
SEC. 7. ACTUARIAL RATE PROPERTIES. 
(a) IN GENERAL.—Section 1308 of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4015) is amended by 
striking subsection (c) and inserting the following new sub-
section: 
‘‘(c) ACTUARIAL RATE PROPERTIES.—Subject only to 
the limitations provided under paragraphs (1) and (2), the 
chargeable rate shall not be less than the applicable esti-
mated risk premium rate for such area (or subdivision 
thereof) under section 1307(a)(1) with respect to the fol-
lowing properties: 
‘‘(1) POST-FIRM PROPERTIES.—Any property the 
construction or substantial improvement of which the 
Director determines has been started after December 
31, 1974, or started after the effective date of the ini-
tial rate map published by the Director under para-