I
103D CONGRESS
2D SESSION
H. R. 4052
To improve the National Flood Insurance Program.
IN THE HOUSE OF REPRESENTATIVES
MARCH 16, 1994
Mr. BACCHUS of Florida (for himself, Mr. BAKER of Louisiana, Mr. MCCOL-
LUM, Mr. LAZIO, Mr. FAZIO, Mr. JOHNSTON of Florida, Mr. SHAW, Mrs.
MEEK, Mr. JEFFERSON, Mr. RAVENEL, Mrs. FOWLER, Mr. SCHUMER,
Mr. FLAKE, Mr. JOHNSON of South Dakota, Mr. LEWIS of Florida, Mr.
MILLER of Florida, Mr. KLINK, Ms. BROWN of Florida, Mr. BILIRAKIS,
Mr. MICA, Mr. LIVINGSTON, Mr. KING, Mr. STEARNS, Mr. ACKERMAN,
Mr. CANADY, Mr. PETERSON of Florida, Mr. LEVY, Mr. COLEMAN, Mr.
GALLEGLY, Mr. BOEHNER, Mr. HASTINGS, Mr. HUTTO, Mr. PETERSON
of Minnesota, Mr. MANZULLO, Mr. DEUTSCH, Mrs. THURMAN, Mr. CAL-
VERT, Mr. GOODLING, Mr. MACHTLEY, Mr. FIELDS of Louisiana, Mr.
GOSS, Mr. YOUNG of Alaska, Mr. CRAPO, Mr. DIAZ-BALART, Ms. ROS-
LEHTINEN, Mr. FRANKS of New Jersey, Mr. DOOLEY, Mr. CRAMER, Mr.
HAYES, Mr. QUINN, Mr. MCCRERY, Mr. SPENCE, Mr. YOUNG of Florida,
Ms. MOLINARI, Mr. TAUZIN, Mr. BATEMAN, Mr. POMBO, and Mr. TAL-
ENT) introduced the following bill; which was referred to the Committee
on Banking, Finance and Urban Affairs
A BILL
To improve the National Flood Insurance Program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘National Flood Insurance Program Improvement Act of
1994’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Definition.
TITLE I—DEFINITIONS
Sec. 101. Flood Disaster Protection Act of 1973.
Sec. 102. National Flood Insurance Act of 1968.
TITLE II—COMPLIANCE AND INCREASED PARTICIPATION
Sec. 201. Expanded flood insurance purchase requirements.
Sec. 202. Escrow of flood insurance payments.
Sec. 203. Notice requirements.
Sec. 204. Placement of flood insurance by regulated lending institution, Federal
agency lender, or servicer.
Sec. 205. Standard flood hazard determination forms.
Sec. 206. Examinations regarding compliance by regulated lending institutions.
Sec. 207. Penalties and corrective actions for failure to require flood insurance,
escrow, or notify.
Sec. 208. Federal Financial Institutions Examination Council.
Sec. 209. Conforming amendment.
TITLE III—RATINGS AND INCENTIVES FOR COMMUNITY
FLOODPLAIN MANAGEMENT PROGRAMS
Sec. 301. Community rating system and incentives for community floodplain
management.
Sec. 302. Community erosion hazard management program.
Sec. 303. Funding.
TITLE IV—MITIGATION OF FLOOD AND EROSION RISKS
Sec. 401. Mitigation assistance in Federal insurance administration.
Sec. 402. Authorization of national flood and erosion mitigation funds under
section 1367.
Sec. 403. State and community mitigation assistance program.
Sec. 404. Repeal of program for purchase of certain insured properties.
Sec. 405. Termination of erosion threatened structures program.
TITLE V—TASK FORCE, ADVISORY COUNCIL, AND STUDIES
Sec. 501. Flood Insurance Interagency Task Force.
Sec. 502. Technical Mapping Advisory Council.
Sec. 503. Economic impact study of erosion hazard areas.
Sec. 504. Justification for Government operation of the National Flood Insur-
ance Program and determination of the feasibility and avail-
ability of private sector flood insurance coverage.
TITLE VI—MISCELLANEOUS PROVISIONS
Sec. 601. Maximum flood insurance coverage amounts.
Sec. 602. Additional coverage for compliance with land use and control meas-
ures.
Sec. 603. Flood insurance program arrangements with private insurance enti-
ties.
Sec. 604. Updating of flood insurance maps and identification of erosion hazard
areas.
Sec. 605. Agricultural structures.
Sec. 606. Funding for increased administrative and operational responsibilities.
Sec. 607. Separate account for flood insurance fund.
Sec. 608. Nonwaiver of flood purchase requirement for recipients of Federal
disaster assistance.
Sec. 609. Insurance waiting period.
Sec. 610. Implementation review by the Director.
Sec. 611. Regulations.
SEC. 2. DEFINITION.
As used in this Act, the term ‘‘Director’’ means the
Director of the Federal Emergency Management Agency.
TITLE I—DEFINITIONS
SEC. 101. FLOOD DISASTER PROTECTION ACT OF 1973.
(a) IN GENERAL.—Section 3(a) of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4003(a)) is amended—
(1) by striking paragraph (5) and inserting the
following new paragraph:
‘‘(5) ‘Federal entity for lending regulation’
means the Board of Governors of the Federal Re-
serve System, the Federal Deposit Insurance Cor-
poration, the Comptroller of the Currency, the Office
of Thrift Supervision, the National Credit Union Ad-
ministration Board, and the Farm Credit Adminis-
tration, and with respect to a particular regulated
lending institution means the entity primarily re-
sponsible for the supervision of the institution;’’;
(2) in paragraph (6), by striking the period at
the end and inserting a semicolon; and
(3) by inserting after paragraph (6) the follow-
ing new paragraphs:
‘‘(7) ‘regulated lending institution’ means a
bank, savings association, credit union, farm credit
bank, Federal land bank association, or production
credit association subject to the supervision of a
Federal entity for lending regulation;
‘‘(8) ‘Federal agency lender’ means the Federal
Housing Administration, the Farmers Home Admin-
istration, the Small Business Administration, and
the Veterans’ Administration, when such agency
makes loans secured by improved real estate or a
manufactured home; and
‘‘(9) ‘servicer’ means a person who receives any
scheduled periodic payments from a borrower pursu-
ant to the terms of any loan secured by a lien on
real property, and who makes the payments of prin-
cipal and interest and such other payments with re-
spect to the amounts received from the borrower as
may be required.’’.
(b) CONFORMING AMENDMENTS.—
(1) REQUIREMENTS TO PURCHASE FLOOD IN-
SURANCE.—Section 102(b) of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4012a(b)) is
amended by striking ‘‘Each Federal instrumentality
responsible for the supervision, approval, regulation,
or insuring of banks, savings and loan associations,
or similar institutions shall by regulation direct such
institutions’’ and inserting ‘‘Each Federal entity for
lending regulation shall by regulation direct regu-
lated lending institutions’’.
(2) EFFECT OF NONPARTICIPATION IN FLOOD
INSURANCE PROGRAM.—Section 202(b) of the Flood
Disaster Protection Act of 1973 (42 U.S.C.
4106(b)) is amended by striking ‘‘Federal instru-
mentality described in such section shall by regula-
tion require the institutions’’ and inserting ‘‘Federal
entity for lending regulation (with respect to regu-
lated lending institutions)’’.
SEC. 102. NATIONAL FLOOD INSURANCE ACT OF 1968.
(a) IN GENERAL.—Section 1370(a) of the National
Flood Insurance Act of 1968 (42 U.S.C. 4121(a)) is
amended—
(1) in paragraph (5), by striking ‘‘and’’ at the
end;
(2) in paragraph (6), by striking the period at
the end and inserting a semicolon; and
(3) by adding at the end the following new
paragraphs:
‘‘(7) the term ‘Federal entity for lending regu-
lation’ means the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Cor-
poration, the Comptroller of the Currency, the Office
of Thrift Supervision, the National Credit Union Ad-
ministration Board, and the Farm Credit Adminis-
tration, and with respect to a particular regulated
lending institution, means the entity primarily re-
sponsible for the supervision of the institution;
‘‘(8) the term ‘regulated lending institution’
means a bank, savings association, credit union,
farm credit bank, Federal land bank association, or
production credit association subject to the super-
vision of a Federal entity for lending regulation;
‘‘(9) the term ‘Federal agency lender’ means
the Federal Housing Administration, the Farmers
Home Administration, the Small Business Adminis-
tration, and the Veterans’ Administration, when
such agency makes loans secured by improved real
estate or a manufactured home;
‘‘(10) the term ‘erosion control measures’
means a community’s efforts to control erosion
through nonstructural and structural projects;
‘‘(11) the term ‘repetitive loss structure’ means
an insured property—
‘‘(A) that incurred flood-related damage on
2 occasions during a 10-year period ending on
the date of the event for which a second claim
is made, in which the cost of repair, on the av-
erage, equaled or exceeded 25 percent of the
value of the structure at the time of each flood
event;
‘‘(B) that was continuously covered by a
contract for flood insurance under this title for
not less than the period beginning upon the 1st
occasion of flood-related damage referred to in
subparagraph (A) and ending upon the 2nd oc-
casion of such damage; and
‘‘(C) that would have a chargeable rate
that is less than the applicable estimated risk
premium for such area (or subdivision thereof)
under section 1307(a)(1);
‘‘(12) the term ‘cost of compliance with land
use and control measures’ means—
‘‘(A) the cost of elevating a structure so
that the structure is in compliance with the
minimum performance standards adopted by
the community pursuant to section 1315 of the
National Flood Insurance Act of 1968; or
‘‘(B) the cost of relocation or demolition of
the structure, if—
‘‘(i) elevating a structure will not re-
sult in compliance; or
‘‘(ii) the insured consents; and
‘‘(13) the term ‘servicer’ means any person who
receives any scheduled periodic payments from a
borrower pursuant to the terms of any loan secured
by a lien on real property, and who makes the pay-
ments of principal and interest and such other pay-
ments with respect to the amounts received from the
borrower as may be required.’’.
(b) CONFORMING AMENDMENT.—Section 1322(d) of
the National Flood Insurance Act of 1968 (42 U.S.C.
4029(d)) is amended by striking ‘‘federally supervised, ap-
proved, regulated or insured financial institution’’ and in-
serting ‘‘regulated lending institution’’.
TITLE II—COMPLIANCE AND
INCREASED PARTICIPATION
SEC. 201. EXPANDED FLOOD INSURANCE PURCHASE RE-
QUIREMENTS.
(a) FEDERAL AGENCIES.—Section 102(a) of the
Flood Disasters Protection Act of 1973 (42 U.S.C.
4012a(a)), is amended—
(1) by inserting ‘‘(1)’’ after ‘‘(a)’’; and
(2) by adding at the end the following new
paragraphs:
‘‘(2) The Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, and the Fed-
eral Agricultural Mortgage Corporation shall implement
procedures reasonably designed to assure that all loans
that are—
‘‘(A) secured by improved real estate or a man-
ufactured home located in an area that has been
identified at the time of the origination of the loan
by the Director as an area having special flood haz-
ards and in which flood insurance is available under
the National Flood Insurance Act of 1968; and
‘‘(B) purchased by any such entity;
are covered for the term of the loan by flood insurance
in the amount provided in subsection (b).
‘‘(3) Each Federal agency lender shall implement
procedures reasonably designed to assure that all prop-
erty—
‘‘(A) that secures loans that the Federal agency
lender makes, increases, extends, or renews; and
‘‘(B) that is improved by real estate or a manu-
factured home located in an area that has been iden-
tified at the time of the origination of the loan by
the Director as an area having special flood hazards
and in which flood insurance is available under the
National Flood Insurance Act of 1968;
is covered for the term of the loan by flood insurance in
the amount provided in subsection (b).’’.
(b) REGULATED LENDING INSTITUTIONS.—Section
102(b) of the Flood Disaster Protection Act of 1973 (42
U.S.C. 4012a(b)), as amended by section 101(b)(1), is
amended by inserting before ‘‘shall by regulation’’ the fol-
lowing: ‘‘(after consultation and coordination with the
Federal Financial Institutions Examination Council estab-
lished under the Federal Financial Institutions Examina-
tion Council Act of 1974)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to all transactions occurring after
the expiration of the 1-year period beginning on the date
of enactment of this Act.
SEC. 202. ESCROW OF FLOOD INSURANCE PAYMENTS.
(a) IN GENERAL.—Section 102 of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4012a) is amended by
adding at the end the following new subsection:
‘‘(d)(1) Each Federal entity for lending regulation,
after consultation and coordination with the Federal Fi-
nancial Institutions Examination Council, shall by regula-
tion require that, if a regulated lending institution re-
quires the escrowing of taxes, insurance premiums, fees,
or any other charges for a loan secured by residential real
estate or manufactured homes, all charges for flood insur-
ance under this title for the property shall be paid by the
borrower to the institution for the duration of the period
during which the regulated lending institution maintains
an escrow account. Upon receipt of a notice from the Di-
rector or the provider of the insurance that insurance pre-
miums, fees, or other charges are due, the institution shall
pay from the escrow account to the provider of the insur-
ance the amount of insurance premiums, fees or other
charges owed.
‘‘(2) If a Federal agency lender requires the
escrowing of taxes, insurance premiums, fees, or any other
charges, then any charges for flood insurance under this
title for the residential real estate or the manufactured
home shall be paid by the borrower to the Federal agency
lender for the duration of the period during which the
Federal agency lender maintains an escrow account. Upon
receipt of a notice from the Director or the provider of
the insurance that insurance premiums, fees, or other
charges are due, the Federal agency lender shall pay from
the escrow account to the provider of the insurance the
amount of insurance premiums, fees or other charges
owed.
‘‘(3) Escrow accounts used to collect flood insurance
premiums, fees, or other charges under this subsection
shall be subject to the provisions of section 10 of the Real
Estate Settlement Procedures Act of 1974.’’.
(b) APPLICABILITY.—Section 102(d) of the Flood
Disaster Protection Act of 1973, as added by subsection
(a), shall apply with respect to any loan made, increased,
extended, or renewed after the expiration of the 1-year pe-
riod beginning on the date of enactment of this Act.
SEC. 203. NOTICE REQUIREMENTS.
Section 1364 of the National Flood Insurance Act of
1968 (42 U.S.C. 4104a) is amended to read as follows:
‘‘SEC. 1364. NOTICE REQUIREMENTS.
‘‘(a) LENDING INSTITUTIONS.—Each Federal entity
for lending regulation, after consultation and coordination
with the Federal Financial Institutions Examination
Council, shall by regulation require that before a regulated
lending institution makes, increases, extends, or renews a
loan secured by improved real estate or a manufactured
home located in an area that has been identified by the
Director as an area having special flood hazards, the insti-
tution shall notify the borrower of the special flood
hazards and of the need to purchase and maintain flood
insurance.
‘‘(b) FEDERAL AGENCY LENDERS.—Before a Fed-
eral agency lender makes, increases, extends, or renews
a loan secured by improved real estate or a manufactured
home located in an area that has been identified by the
Director as an area having special flood hazards, the Fed-
eral agency lender shall notify the borrower of the special
flood hazards and of the need to purchase and maintain
flood insurance.
‘‘(c) PARTICIPATING COMMUNITIES.—The Director
shall by regulation require each participating community,
upon receiving the semiannual list prepared by the Direc-
tor of all changes, revisions, and amendments made to the
flood insurance rate maps during the preceding 6 months,
to determine whether any properties in their community
have been affected, and to provide annual notice by mail,
notice by publication, notice on tax assessments, or notice
by other reasonable method, to regulated lending institu-
tions that are known to lend in the community, and to
the owners of all properties newly determined to be, or
no longer to be, in an area having special flood hazards,
of the flood insurance purchase requirements under sec-
tion 102(b).
‘‘(d) CONTENTS OF NOTICE.—Notification required
by this section shall include a warning, in a form to be
established by the Director, stating that the real estate
or manufactured home securing the loan is located in an
area having special flood hazards, a description of the
flood insurance purchase requirements under section
102(b), a statement that flood insurance coverage may be
purchased under the National Flood Insurance Program
and may also be available from private insurers, and any
other information that the Director considers necessary to
carry out the purposes of the National Flood Insurance
Program.’’.
SEC. 204. PLACEMENT OF FLOOD INSURANCE BY REGU-
LATED 
LENDING 
INSTITUTION, 
FEDERAL
AGENCY LENDER, OR SERVICER.
(a) REQUIRED ACTIONS BY LENDER.—Section 102
of the Flood Disaster Protection Act of 1973 (42 U.S.C.
4012a), as amended by section 202(a), is amended by add-
ing at the end the following new subsection:
‘‘(e) REQUIRED ACTIONS BY LENDER.—
‘‘(1) NOTIFICATION TO BORROWER OF LACK OF
COVERAGE.—If, at the time of origination or at any