SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Flood Insurance Re-
form 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 in-
formation to the public, (C) encourages State and 
local governments to make appropriate land use ad-
justments to constrict the development of land which 
is exposed to flood damage and minimize damage 
caused by flood losses, and (D) makes flood insur-
ance available on a nationwide basis that would oth-
erwise not be available, to accelerate recovery from 
floods, mitigate future losses, save lives, and reduce 
the personal and national costs of flood disasters; 
(2) the national flood insurance program in-
sures 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 prop-
erties were built before local community implementa-
tion of floodplain management standards under the 
program and thus are eligible for subsidized flood in-
surance; 
(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, 
without 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 
disaster 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 
property owners who choose to remain vulnerable to 
repetitive flood damage can encourage property own-
ers 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 amend-
ed as follows: 
(1) BORROWING AUTHORITY.—In the first sen-
tence of section 1309(a) (42 U.S.C. 4016(a)), by 
striking ‘‘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 accord-
ance’’ 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 in-
serting 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 financial assistance to States and communities for 
taking actions with respect to severe repetitive loss prop-
erties (as such term is defined in subsection (b)) to miti-
gate flood damage to such properties and losses to the Na-
tional Flood Insurance Fund from such properties. 
‘‘(b) SEVERE REPETITIVE LOSS PROPERTY.—For 
purposes of this section, the term ‘severe repetitive loss 
property’ 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 
before the date of the enactment of the 
Flood Insurance Reform Act of 2003, with 
the amount of each such claim exceeding 
$5,000, and with the cumulative amount of 
such claims payments 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 
Flood Insurance Reform Act of 2003, with 
the amount of each such claim exceeding
$3,000, and with the cumulative amount of 
such claims payments 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, 
relocation, demolition, and floodproofing of struc-
tures, and minor physical localized flood control 
projects. 
‘‘(2) PURCHASE.—To purchase severe repetitive 
loss properties, subject to subsection (f). 
‘‘(d) MATCHING REQUIREMENT.—
actions to reduce the number of such prop-
erties. 
‘‘(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 
funded with grant amounts. 
‘‘(3) NON-FEDERAL FUNDS.—For purposes of 
this subsection, the term ‘non-Federal funds’ in-
cludes State or local agency funds, in-kind contribu-
tions, any salary paid to staff to carry out the eligi-
ble activities of the recipient, the value of the time 
and services contributed by volunteers to carry out 
such activities (at a rate determined by the Direc-
tor), and the value of any donated material or build-
ing and the value of any lease on a building. 
‘‘(e) STANDARDS FOR MITIGATION OFFERS.—The 
program under this section for providing assistance for eli-
gible 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 as-
sistance for properties in the order that will result 
in the greatest amount of savings to the National 
Flood Insurance Fund in the shortest period of time. 
‘‘(2) OFFERS.—The Director shall provide as-
sistance in a manner that permits States and com-
munities to make offers to owners of severe repet-
itive loss properties to take eligible activities under 
subsection (c) as soon as is practicable. 
‘‘(3) NOTICE.—Upon making an offer to pro-
vide assistance with respect to a property for any eli-
gible activity under subsection (c), the State or com-
munity shall notify each holder of a recorded inter-
est 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 se-
vere repetitive loss property only if the following require-
ments are met: 
‘‘(1) USE OF PROPERTY.—The State or com-
munity 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 sec-
tion 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 reloca-
tion assistance under such section 404(b). 
‘‘(2) PURCHASE PRICE.—The amount of pur-
chase offer is not less than the greatest of— 
‘‘(A) 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; 
‘‘(B) the total amount owed, at the time 
the offer to purchase is made, under any loan 
secured by a recorded interest on the property; 
‘‘(C) an amount equal to the fair market 
value of the property immediately before the 
most recent flood event affecting the property; 
and 
‘‘(D) an amount equal to the replacement 
value of the property immediately before the 
most recent flood event affecting the property, 
except that this subparagraph shall apply in the 
case only of a property for which the State or 
community taking action under subsection
(c)(2) determines, and the Director concurs, 
that the fair market value referred to in sub-
paragraph (C) of the property is less than the 
purchase price of a replacement primary resi-
dence that is of comparable value, functionally 
equivalent, and located in the same community 
or market area but not in an area having spe-
cial flood hazards. 
‘‘(g) INCREASED PREMIUMS IN CASES OF REFUSAL 
TO MITIGATE.— 
‘‘(1) IN GENERAL.—In any case in which the 
owner of a severe repetitive loss property refuses an 
offer to take action under paragraph (1) or (2) of 
subsection (c) with respect to such property, the Di-
rector shall— 
‘‘(A) notify each holder of a recorded inter-
est on the property of such refusal; and 
‘‘(B) 
notwithstanding 
subsections 
(a) 
through (c) of section 1308, thereafter the 
chargeable premium rate with respect to the 
property shall be the amount equal to 150 per-
cent of the chargeable rate for the property at 
the time that the offer was made, as adjusted 
by any other premium adjustments otherwise 
applicable to the property and any subsequent
increases pursuant to paragraph (2) and sub-
ject to the limitation under paragraph (3). 
‘‘(2) INCREASED PREMIUMS UPON SUBSEQUENT 
FLOOD
DAMAGE.—Notwithstanding subsections (a) 
through (c) of section 1308, if the owner of a severe 
repetitive loss property does not accept an offer to 
take action under paragraph (1) or (2) of subsection 
(c) with respect to such property and a claim pay-
ment exceeding $1,500 is made under flood insur-
ance coverage under this title for damage to the 
property caused by a flood event occurring after 
such offer is made, thereafter the chargeable pre-
mium rate with respect to the property shall be the 
amount equal to 150 percent of the chargeable rate 
for the property at the time of such flood event, as 
adjusted by any other premium adjustments other-
wise applicable to the property and any subsequent 
increases pursuant to this paragraph and subject to 
the limitation under paragraph (3). 
‘‘(3) LIMITATION ON INCREASED PREMIUMS.— 
In no case may the chargeable premium rate for a 
severe repetitive loss property be increased pursuant 
to this subsection to an amount exceeding the appli-
cable estimated risk premium rate for the area (or 
subdivision thereof) under section 1307(a)(1).
‘‘(4) TREATMENT OF DEDUCTIBLES.—Any in-
crease in chargeable premium rates required under 
this subsection for a severe repetitive loss property 
may be carried out, to the extent appropriate, as de-
termined by the Director, by adjusting any deduct-
ible charged in connection with flood insurance cov-
erage under this title for the property. 
‘‘(5) NOTICE
OF
CONTINUED
OFFER.—Upon 
each renewal or modification of any flood insurance 
coverage under this title for a severe repetitive loss 
property, the Director shall notify the owner that 
the offer made pursuant to subsection (c) is still 
open. 
‘‘(6) APPEALS.— 
‘‘(A) IN GENERAL.—Any owner of a severe 
repetitive loss property may appeal a deter-
mination of the Director to take action under 
paragraph (1)(B) or (2) 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 
violation of Federal, State, or local law, or-
dinance, 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 receiv-
ing the request, the Director shall select, from 
a list of independent third parties compiled by 
the Director for such purpose, a party to hear 
such appeal. 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 sub-
paragraph (A) exist. During the pendency of an 
appeal under this paragraph, the Director shall 
stay the applicability of the rates established 
pursuant to paragraph (1)(B) or (2), as appli-
cable. 
‘‘(C) EFFECT
OF
FINAL
DETERMINA-
TION.—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 prop-
erty involved in the appeal from the 
amount required under paragraph (1)(B) 
or (2) and the Director shall promptly re-
duce 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 
increase the chargeable risk premium rate 
for such property to the amount estab-
lished pursuant to paragraph (1)(B) or 
(2), as applicable, and shall collect from 
the property owner the amount necessary 
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 Flood In-
surance Reform Act of 2003, the Director shall 
submit a report to the House of Representatives 
and the Senate describing the rules, procedures, 
and administration for appeals under this para-
graph. 
‘‘(h) DISCRETIONARY ACTIONS IN CASES OF FRAUD-
ULENT CLAIMS.—If the Director determines that a fraud-
ulent 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 cov-
erage 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 
assistance 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 
properties, but only to the extent provided in section 
1362(i); and’’. 
SEC. 5. AMENDMENTS TO EXISTING FLOOD MITIGATION AS-
SISTANCE PROGRAM. 
(a) STANDARD
FOR
APPROVAL
OF
MITIGATION 
PLANS.—Section 1366(e)(3) of the National Flood Insur-
ance Act of 1968 (42 U.S.C. 4104(c) is amended by add-
ing at the end the following new sentence: ‘‘The Director
may approve only mitigation plans that give priority for 
funding to such properties, or to such subsets of prop-
erties, as are in the best interest of the National Flood 
Insurance Fund.’’. 
(b) PRIORITY FOR MITIGATION ASSISTANCE.—Sec-
tion 1366(e) of the National Flood Insurance Act of 1968 
(42 U.S.C. 4104c) is amended by striking paragraph (4) 
and inserting the following new paragraph: 
‘‘(4) PRIORITY FOR MITIGATION ASSISTANCE.— 
In providing grants under this subsection for mitiga-
tion activities, the Director shall give first priority 
for funding to such properties, or to such subsets of 
such properties as the Director may establish, that 
the Director determines are in the best interests of 
the National Flood Insurance Fund and for which 
matching amounts under subsection (f) are avail-
able.’’. 
(c) COORDINATION WITH STATES
AND COMMU-
NITIES.—Section 1366 of the National Flood Insurance 
Act of 1968 (42 U.S.C. 4104c) is amended by adding at 
the end the following new subsection: 
‘‘(m) COORDINATION WITH STATES AND COMMU-
NITIES.—The Director shall, in consultation and coordina-
tion with States and communities take such actions as are 
appropriate to encourage and improve participation in the