[House Report 108-266]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 108-266
======================================================================
TWO FLOODS AND YOU ARE OUT OF THE TAXPAYERS' POCKET ACT OF 2003
_______
September 5, 2003.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Oxley, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 253]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred the
bill (H.R. 253) to amend the National Flood Insurance Act of
1968 to reduce losses to properties for which repetitive flood
insurance claim payments have been made, having considered the
same, report favorably thereon with an amendment and recommend
that the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 1
Purpose and Summary.............................................. 10
Background and Need for Legislation.............................. 10
Hearings......................................................... 11
Committee Consideration.......................................... 11
Committee Votes.................................................. 11
Committee Oversight Findings..................................... 12
Performance Goals and Objectives................................. 12
New Budget Authority, Entitlement Authority, and Tax Expenditures 12
Committee Cost Estimate.......................................... 12
Congressional Budget Office Cost Estimate........................ 12
Federal Mandates Statement....................................... 15
Advisory Committee Statement..................................... 15
Constitutional Authority Statement............................... 15
Applicability to Legislative Branch.............................. 15
Section-by-Section Analysis...................................... 15
Changes in Existing Law Made by the Bill, as Reported............ 18
Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
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 information to the public,
(C) encourages State and local governments to make appropriate
land use adjustments to constrict the development of land which
is exposed to flood damage and minimize damage caused by flood
losses, and (D) makes flood insurance available on a nationwide
basis that would otherwise 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 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 significant drain
on the resources of the national flood insurance program,
costing about $200,000,000 annually;
(6) repetitive-loss properties comprise approximately 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, 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 reduced 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 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 consideration 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 sentence 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 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 MITIGATION OF SEVERE
REPETITIVE LOSS PROPERTIES.
(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
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 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 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
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 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
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 used only for the following activities:
``(1) Mitigation activities.--To carry out mitigation
activities that reduce flood damages to severe repetitive loss
properties, including elevation, relocation, 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 paragraph (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 activities 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 extent that the State or
community involved is required to contribute, for each
severe repetitive loss property for which grant amounts
are provided, 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' includes State or local agency
funds, in-kind contributions, any salary paid to staff to carry
out the eligible 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 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 program 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 assistance 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 assistance in a
manner that permits States and communities 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 repetitive loss property only if
the following requirements are met:
``(1) Use of property.--The State or community 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 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, accepted, or from which a structure will
be removed pursuant to a project provided property acquisition
and relocation assistance under such section 404(b).
``(2) Purchase price.--The amount of purchase 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; and
``(C) an amount equal to the fair market value of the
property immediately before the most recent flood event
affecting the property.
``(g) Increase to Actuarial Rates 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 Director shall--
``(A) notify each holder of a recorded interest 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 applicable estimated
risk premium rate for such area (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 determination 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 functionally equivalent.
``(ii) As a result of such action, the
preservation or maintenance of any prehistoric
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,
impaired, or disrupted.
``(iii) The flooding that resulted in the
flood insurance claims described in subsection
(b)(2) for the property resulted 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 Management Agency that were
current at the time and did not indicate that
the property was located in an area having
special flood hazards.
``(B) Procedure.--An appeal under this paragraph of a
determination of the Director shall be made by filing,
with the Director, a request for an appeal within 90
days after receiving notice of such determination. Upon
receiving 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
subparagraph (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).
``(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 involved in
the appeal from the amount required under
paragraph (1) and the Director 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 increase 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 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 requesting
the appeal, if the final determination 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 describing the rules, procedures, and
administration for appeals under this paragraph.
``(h) Discretionary Actions in Cases of Fraudulent Claims.--If the
Director determines that a fraudulent 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 policyholder 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 Insurance 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 expended.
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. ENHANCED AUTHORITY IN FLOOD MITIGATION ASSISTANCE PROGRAM.
(a) Mitigation Assistance for Repetitive Claims Properties.--Section
1366(e) of the National Flood Insurance 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 repetitive 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 paragraph:
``(6) Notice.--Upon making an offer to conduct any eligible
mitigation activity under paragraph (5) with respect to a
repetitive claims property or a severe 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.--Section 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
inserting the following: ``except that amounts provided under this
section may not be used for acquisition of any property unless--
``(i) the State or community 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
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,
accepted, or from which a structure will be
removed pursuant to a project provided property
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
immediately before the most recent
flood event affecting the property''.
(c) Waiver of Limitations on Assistance.--Section 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 dollar 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 Relief 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 Refusal 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 interest 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 applicable 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 determination 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 functionally equivalent.
``(ii) As a result of such action, the
preservation or maintenance of any prehistoric
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,
impaired, or disrupted.
``(iii) The flooding that resulted in the
flood insurance claims payments described in
subsection (n)(2) for the property resulted
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 Management Agency that were
current at the time and did not indicate that
the property was located in an area having
special flood hazards.
``(B) Procedure.--An appeal under this paragraph of a
determination of the Director shall be made by filing,
with the Director, a request for an appeal within 90
days after receiving notice of such determination. Upon
receiving 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
subparagraph (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).
``(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 involved in
the appeal from the amount required under
paragraph (1) and the Director 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 increase 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 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 requesting
the appeal, if the final determination in the
appeal is that the grounds under subparagraph
(A) do not exist; and
``(ii) by the National Flood Mitigation 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 describing the rules, procedures, and
administration for appeals under this paragraph, which
shall be submitted together with the report required
under section 1362(g)(2)(E).
``(k) Discretionary Actions in Cases of Fraudulent Claims.--If the
Director determines that a fraudulent claim was made under flood
insurance coverage under this title for a repetitive claims 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 policyholder upon
expiration and deny the provision of any new flood insurance
coverage under this title to such policyholder for the
property.''.
(e) Coordination With States and Communities.--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 Communities.--The Director shall,
in consultation and coordination with States and communities:
``(1) Identification of repetitive claims properties.--
Identify repetitive claims properties and properties at risk of
becoming repetitive claims properties.
``(2) Management of 100-year floodplain.--Take such actions
as are appropriate to encourage and improve participation of
owners of properties that are not located in areas having
special flood hazards but are located within the 100-year
floodplain.''.
(f) Definition of Repetitive Claims Property.--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:
``(n) Definitions.--For purposes of this section:
``(1) Community.--The term `community' means--
``(A) a political subdivision that--
``(i) has zoning and building code
jurisdiction over a particular area having
special flood hazards; and
``(ii) is participating in the national flood
insurance program; or
``(B) a political subdivision of a State, or other
authority, that is designated to develop and administer
a mitigation plan and manage projects by political
subdivisions, all of which meet the requirements of
subparagraph (A).
``(2) Repetitive claims property.--The term `repetitive
claims property' means, without regard to the ownership of the
property, a property with respect to which claim payments for
losses have been made--
``(A) under flood insurance coverage under this
title,
``(B) on more than one occasion within a 10-year
period, and
``(C) for which the cumulative value of the amount by
which such claims exceed the amount of any applicable
deductible under such coverage is $5,000 or more,
The Director may, by regulation, further define subsets of
repetitive claims properties for purposes of subsection
(e)(4).''.
(g) Funding.--Section 1367(b) of the National Flood Insurance Act of
1968 (42 U.S.C. 4104d(b)) is amended--
(1) by redesignating paragraphs (2) and (3) as paragraphs (3)
and (4); and
(2) by striking paragraph (1) and inserting the following new
paragraphs:
``(1) in each fiscal year, amounts from the National Flood
Insurance Fund not exceeding $20,000,000;
``(2) in each of fiscal years 2004, 2005, 2006, 2007, and
2008, in addition to amounts under paragraph (1), amounts from
the National Flood Insurance Fund not exceeding $40,000,000, to
remain available until expended, except that--
``(A) such amounts shall be used only under section
1366 for mitigation activities for repetitive claims
properties (as such term is defined in section
1366(n)); and
``(B) notwithstanding any other provision of this
title, amounts made available pursuant to this
paragraph shall not be subject to offsetting
collections through premium rates for flood insurance
coverage under this title; and''.
SEC. 6. FEMA AUTHORITY TO FUND MITIGATION ACTIVITIES FOR INDIVIDUAL
REPETITIVE CLAIMS PROPERTIES.
(a) In General.--Chapter I of the National Flood Insurance Act of
1968 (42 U.S.C. 4011 et seq.) is amended by adding at the end the
following new section:
``grants for repetitive insurance claims properties
``Sec. 1323. (a) In General.--The Director may provide funding for
mitigation actions that reduce flood damages to repetitive claims
properties, but only if the Director determines that--
``(1) such activities are in the best interest of the
National Flood Insurance Fund; and
``(2) such activities can not be funded under the program
under section 1366 because--
``(A) the requirements of section 1366(g) are not
being met by the State or community in which the
property is located; or
``(B) the State or community does not have the
capacity to manage such activities.
``(b) Priority for Worst-Case Properties.--In determining properties
for which funding is to be provided under this section, the Director
shall give priority based on the amount of losses to the National Flood
Insurance Fund that claims for a property have caused or are reasonably
expected to cause.
``(c) Definition.--For purposes of this section, the term `repetitive
claims property' has the meaning given such term in section 1366(n).''.
(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 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 provision of this title, amounts made
available pursuant to this paragraph shall not be subject to
offsetting collections through premium rates for flood
insurance coverage 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 subsection:
``(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 estimated risk premium rate for such area (or
subdivision thereof) under section 1307(a)(1) with respect to the
following 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 initial rate map published by the
Director under paragraph (2) of section 1360 for the area in
which such property is located, whichever is later, except that
the chargeable rate for properties under this paragraph shall
be subject to the limitation under subsection (e).
``(2) Properties refusing mitigation assistance.--Any
property for which the Director has taken action under section
1362(g)(1) or 1366(i)(1).
``(3) Certain leased coastal and river properties.--Any
property leased from the Federal Government (including
residential and nonresidential properties) that the Director
determines is located on the river-facing side of any dike,
levee, or other riverine flood control structure, or seaward of
any seawall or other coastal flood control structure.''.
(b) Inapplicability of Annual Limitations on Premium Increases.--
Section 1308(e) of the National Flood Insurance Act of 1968 (42 U.S.C.
4015(e)) is amended by striking ``Notwithstanding'' and inserting
``Except with respect to properties described under paragraph (2) or
(3) of subsection (c) and notwithstanding''.
SEC. 8. REMOVING REPETITIVE INSURANCE CLAIMS PROPERTIES FROM FEDERAL
DISASTER ASSISTANCE RESPONSIBILITY.
(a) In General.--Section 582 of the National Flood Insurance Reform
Act of 1994 (42 U.S.C. 5154a) is amended--
(1) by redesignating subsections (d) and (e) as subsections
(e) and (f), respectively; and
(2) by inserting after subsection (c) the following new
subsection:
``(d) Unmitigated Repetitive Insurance Claims Properties.--
Notwithstanding any other provision of law, no Federal disaster relief
assistance made available in a flood disaster area may be used to make
a payment (including any loan assistance payment) for repair,
replacement, or restoration for damage to a property located in such
area if--
``(1) such property is a repetitive claims property (as such
term is defined in section 1366(n) of the National Flood
Insurance Act of 1968 (42 U.S.C. 4104c(o)) or a severe
repetitive loss property (as such term is defined in section
1362(b) of such Act (42 U.S.C. 4103(b)); and
``(2) in accordance with such requirements as the Director
may establish, mitigation assistance under section 1362 or 1366
of the National Flood Insurance Act of 1968 has been offered to
the owner of the property, before or after the occurrence of
the flood loss events, which was refused by the owner.''.
(b) Effective Date.--Notwithstanding subsection (f) of section 582 of
the National Flood Insurance Reform Act of 1994 (as so redesignated by
paragraph (1)(A) of this subsection), the amendment made by paragraph
(1) shall apply to disasters declared after the date of the enactment
of this Act.
SEC. 9. ELECTRONIC DATABASE OF REPETITIVE CLAIMS PROPERTIES.
Section 1364 of the National Flood Insurance Act of 1968 (42 U.S.C.
4104a) is amended by adding at the end the following new subsection:
``(d) Electronic Database of Repetitive Claims Properties.--The
Director may, if the Director determines such action is feasible,
establish and maintain a database identifying by location and address
all repetitive claims properties (as such term is defined in section
1366(n)), repetitive loss structures (as such term is defined in
section 1370), and severe repetitive loss properties (as such term is
defined in section 1362(b)). If established, the Director shall make
the database available to the public in a format that may be searched
electronically. Such a database shall not include any information
regarding ownership of properties.''.
SEC. 10. REPLACEMENT OF MOBILE HOMES ON ORIGINAL SITES.
Section 1315 of the National Flood Insurance Act of 1968 (42 U.S.C.
4022) is amended by adding at the end the following new subsection:
``(c) Replacement of Mobile Homes on Original Sites.--
``(1) Community participation.--The placement of any mobile
home on any site shall not affect the eligibility of any
community to participate in the flood insurance program under
this title and the Flood Disaster Protection Act of 1973
(notwithstanding that such placement may fail to comply with
any elevation or flood damage mitigation requirements), if--
``(A) such mobile home was previously located on such
site;
``(B) such mobile home was relocated from such site
because of flooding that threatened or affected such
site; and
``(C) such replacement is conducted not later than
the expiration of the 180-day period that begins upon
the subsidence (in the area of such site) of the body
of water that flooded to a level considered lower than
flood levels.
``(2) Definition.--For purposes of this subsection, the term
`mobile home' has the meaning given such term in the law of the
State in which the mobile home is located.''.
SEC. 11. REITERATION OF FEMA RESPONSIBILITY TO MAP MUDSLIDES.
As directed in section 1360(b) of the National Flood Insurance Act of
1968 (42 U.S.C. 4101(b)), the Director of the Federal Emergency
Management Agency is again directed to accelerate the identification of
risk zones within flood-prone and mudslide-prone areas, as provided by
subsection (a)(2) of such section 1360, in order to make known the
degree of hazard within each such zone at the earliest possible date.
Purpose and Summary
H.R. 253, the Two Floods and You are Out of the Taxpayer's
Pocket Act of 2003, extends the authorization of the National
Flood Insurance Program (NFIP) from December 31, 2003 to
September 30, 2008. This measure creates a pilot program to
mitigate the severe repetitive loss properties in the NFIP and
sets up an equitable process for the treatment of policyholders
who refuse mitigation. This legislation also uses the existing
Flood Mitigation Assistance Program (FMA) to further mitigate
repetitive claims properties. Finally, H.R. 253 authorizes
funds to be transferred from the National Flood Insurance Fund
into the National Mitigation Fund for both the pilot program
and the FMA program for purposes of mitigation.
Background and Need for Legislation
The NFIP was created as part of the National Flood
Insurance Act of 1968. Prior to that time, insurance companies
generally did not offer coverage for flood disasters because of
the high risks involved. National flood insurance is available
in almost 20,000 communities across the United States and its
territories. In order to participate in the program,
communities must agree to abide by certain hazard mitigation
provisions. These provisions include adopting building codes
that require new floodplain structures to be protected against
flooding or elevated above the 100-year floodplain.
The NFIP insures approximately 4.4 million policyholders.
Approximately 48,000 properties currently insured have
experienced, within a ten-year period, two or more flood claims
where each exceeds $1,000 over the applicable deductible. These
properties, which are considered as repetitive loss structures
by the Federal Emergency Management Agency (FEMA), cost the
NFIP about $200 million annually.
Approximately 10,000 of these properties currently insured
under the program have either two or three claims that
cumulatively exceed the building value or four or more claims,
each exceeding $1,000 over the applicable deductible. These
properties, while comprising approximately one percent of the
currently insured properties, are expected to account for 25 to
30 percent of claims paid. The vast majority of repetitive-loss
properties were built before community implementation of
floodplain management standards and are thus eligible for
subsidized flood insurance which is below the actuarial risk
rate. FEMA has neither the funds nor the statutory tools to
mitigate these repetitive loss properties.
The NFIP has been amended or reauthorized dozens of times
since the late 1960s as part of America's public policy
response to flooding. However, the 107th Congress adjourned at
the end of November without extending FEMA's statutory
authority to issue flood insurance policies beyond December 31,
2002. On January 13, 2002, the President signed into law
bipartisan legislation, H.R. 11 (Public Law 108-3), which
reauthorized the NFIP retroactively from January 1 through
December 31, 2003. The NFIP was reauthorized for only one year
so that potential changes to the program could be considered
during 2003.
Hearings
No hearings were held on this legislation. However, the
Subcommittee on Housing and Community Opportunity held a
hearing on April 1, 2003 entitled ``The National Flood
Insurance Program: Review and Reauthorization.'' The following
witnesses testified: The Honorable Richard H. Baker, M.C.; The
Honorable Doug Bereuter, M.C.; The Honorable Earl Blumenauer,
M.C.; Mr. Anthony Lowe, Mitigation Division Director and Flood
Insurance Administrator, Department of Homeland Security; Mr.
Chad Berginnis, Vice-Chair of the Association of State
Floodplain Managers; Mr. Fletcher J. Wiley, Flood Insurance
Task Force Chair of the Independent Insurance Agents and
Brokers of America; Mr. Gerald Nielsen, Nielsen Law Firm,
Metairie, Louisiana; and Mr. Rick Willetts, III, President and
CEO, Cooperative Bank of Wilmington, North Carolina on behalf
of America's Community Bankers.
Committee Consideration
On July 23, 2003, the Subcommittee on Housing and Community
Opportunity was discharged from the further consideration of
H.R. 253 by unanimous consent and the Committee on Financial
Services met in open session to consider the bill. The
Committee ordered the bill reported to the House with a
favorable recommendation, with an amendment, by a voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. No
record votes were taken in conjunction with the consideration
of this legislation. A motion by Mr. Oxley to report the bill
to the House with a favorable recommendation was agreed to by a
voice vote.
The following amendments were considered:
s An amendment in the nature of a substitute offered
by Mr. Bereuter, no. 1, reauthorizing the National
Flood Insurance Program through September 30, 2008 and
setting forth policies as to how to address repetitive
loss properties, was agreed to by a voice vote, as
amended.
An amendment to the amendment in the nature of a
substitute offered by Mr. Ney, no. 1a, clarifying the
application of certain provisions, was agreed to by a
voice vote.
An amendment to the amendment in the nature of a
substitute offered by Ms. Hooley of Oregon, no. 1b,
reiterating the responsibility of FEMA to map
mudslides, was agreed to by a voice vote.
An amendment to the amendment in the nature of a
substitute offered by Mr. Baker, no. 1c, increasing the
thresholds necessary for a property to qualify as a
severe repetitive loss for purposes of mitigation, was
agreed to by a voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee made findings that are
reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
The Department of Homeland Security will use the authority
in this legislation to dramatically reduce both severe
repetitive loss properties and repetitive claims properties as
defined in H.R. 253. The two main objectives are: the
mitigation of designated properties so as to protect
policyholders from the dangers of floods; and the enhancement
of the long-term solvency of the NFIP.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of budget authority, entitlement authority, or
tax expenditures or revenues contained in the cost estimate
prepared by the Director of the Congressional Budget Office
pursuant to section 402 of the Congressional Budget Act of
1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 3, 2003.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 253, the Two
Floods and You Are Out of the Taxpayers' Pocket Act of 2003.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kim Cawley.
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.
H.R. 253--Two Floods and You Are Out of the Taxpayers Pocket Act of
2003
Summary: H.R. 253 would extend authority to operate the
National Flood Insurance Program (NFIP) within the Department
of Homeland Security (DHS) until 2008. Under current law, the
program's authority expires on December 31, 2003. The bill also
would establish a pilot program to give states and local
communities financial assistance for mitigating severe
repetitive loss properties (properties that have made four or
more flood insurance claims exceeding $5,000 each under the
National Flood Insurance Program). The bill would authorize the
appropriation of $40 million a year over the 2004-2008 period
for this new pilot program. H.R. 253 also would increase the
amounts authorized to be appropriated for the existing flood
mitigation program by $40 million a year over the 2004-2008
period. Finally, the bill would authorize the appropriation of
an additional $10 million a year for mitigation of individual
properties in states and communities that do not have the
capacity to manage their own mitigation programs.
Assuming appropriation if the authorized amounts, CBO
estimates that implementing the bill would cost $315 million
over the 2004-2008 period. Enacting H.R. 253 would affect
direct spending, but CBO estimates that impact would be
insignificant each year relative to the budget resolution
baseline (which assumes the flood insurance program is
extended).
H.R. 253 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
State, local, and tribal governments may benefit from the grant
program to reduce the number of claims made by certain property
owners. Any costs associated with this program would be a
condition of aid and thus would be incurred voluntarily.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 253 is shown in the following table.
The costs of this legislation fall within budget function 450
(community and regional development).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------
2004 2005 2006 2007 2008
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION \1\
Authorization level................................................ 90 90 90 90 90
Estimated outlays.................................................. 18 45 72 90 90
----------------------------------------------------------------------------------------------------------------
\1\ H.R. 253 also would reduce direct spending by less than $1 million a year.
Basis of estimate: For this estimate, CBO assumes that H.R.
253 will be enacted early in fiscal year 2004 and that the
authorized amounts will be appropriated each year. Estimates of
outlays are based on historical spending patterns of similar
programs and information from the Department of Homeland
Security.
Spending subject to appropriation
H.R 253 would authorize the appropriation of $90 million a
year over the 2004-2008 period and an additional $10 million a
year after 2008 for mitigation programs to address repetive
losses from floods. Assuming appropriation of the authorized
amounts. CBO estimates that implementing this bill would cost
$315 million over the 2004-2008 period.
According to DHS, there are currently around 48,000 insured
properties that have experienced multiple floods and would
benefit from mitigation activities such as elevation,
relocation, demolition, or flood-proofing. Mitigating those
properties could result in fewer claims paid following a
subsequent flood. According to DHS, it would take 10 to 12
years to realize sufficient savings to pay for the cost of
mitigating a repetitive-loss property. CBO expects that this
program would yield savings to the NFIP; however, no savings
can be attributed to H.R. 253 because the size and duration of
any mitigation program would depend on amounts provided in
future appropriation acts.
Under the bill, if an owner of a property refuses to
participate in federal mitigation programs, then the property
would no longer be eligible for subsidized insurance premiums.
Making the insurance rate actuarially sound would result in an
increase in premiums collected to the federal government. (In
addition, that same property owner who refuses mitigation would
not be eligible for disaster relief funding if a subsequent
flood damages their property.) The amount of any additional
premiums collected under this provision would also depend on
the parameters of the mitigation program which be determined in
future appropriation acts and thus cannot be attributed to H.R.
253.
Direct spending
Reauthorization of the National Flood Insurance Program.
H.R. 253 would reauthorize the NFIP through 2008. Consistent
with section 257 of the Balanced Budget and Emergency Deficit
Control Act, which specifies that certain expiring programs
should be assumed to continue for budget projection proposes,
the baseline projections underlying the current Congressional
budget resolution assume that the National Flood Insurance
Program continues beyond its scheduled expiration date. Over
the near term, CBO projects that premiums collected by the
National Flood Insurance Fund equal claims paid from the fund.
That assumption is used because, while projecting premiums paid
to the NFIP is straightforward, the level of claims paid in any
year is a function of the incidence and severity of floods
which cannot be projected on an annual basis. Over the long
term, the NFIP is not considered to be actually sound because
some properties receive subsidized insurance.
Actuarial Rate Properties. H.R. 253 would make certain
federally owned coastal and river properties that are leased to
nonfederal entities subject to actuarially sound insurance
premiums. CBO estimates that this provision would increase the
amount of premiums collected, but the increase would be less
than $1 million a year because of the small number of
properties involved.
Intergovernmental and private-sector impact: H.R. 253
contains no intergovernmental or private-sector mandates as
defined in UMRA. State, local, and tribal governments may
benefit from the grant program to reduce the number of claims
made by certain property owners. Any costs associated with this
program would be a condition of aid and thus would be incurred
voluntarily.
Estimate prepared by: Federal Costs: Julie Middleton.
Impact on State, Local, and Tribal Governments: Melissa
Merrell. Impact on the Private Sector: Cecil McPherson.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
defense and general welfare of the United States), and clause 3
(relating to the power to regulate foreign and interstate
commerce).
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1. Short Title
This section establishes the short title of the bill, the
``Two Floods and You are Out of the Taxpayer's Pocket Act of
2003.''
Section 2. Congressional Findings
This section provides certain findings by Congress
regarding the need for the legislation.
Section 3. Extension of Program and Consolidation of Authorizations
This section amends the National Flood Insurance Act of
1968 by extending the National Flood Insurance Program through
September 30, 2008.
Section 4. Establishment of Pilot Program for Mitigation of Severe
Repetitive Loss Properties
This section amends the National Flood Insurance Act of
1968 by adding a new section 1362 which establishes a pilot
program for the mitigation of severe repetitive loss properties
(Pilot Program). Under this section, the Director of FEMA may
provide financial assistance to States and communities for the
mitigation of severe repetitive loss properties.
The legislation defines ``severe repetitive loss
properties'' as properties (1) for which 4 or more separate
NFIP flood insurance claims payments have been made prior to
the date of the enactment of this legislation, with the amount
of each claim exceeding $5,000 with the cumulative amount of
such claims payments exceeding $20,000; (2) for which 4 or more
separate NFIP claims payments have been made after the date of
enactment of this legislation, with the amount of each claim
exceeding $3,000 with the cumulative amount of those claims
payments exceeding $15,000; or (3) for which 2 or more separate
NFIP claims payments cumulatively exceed the value of the
insured property.
The legislation also requires that the Director of FEMA
provide mitigation offers for properties under the Pilot
Program in the order that will result in the greatest amount of
savings to the National Flood Insurance Fund in the shortest
period of time. Mitigation activities include elevation,
relocation, demolition, floodproofing of structures, minor
physical localized flood control projects, and buyouts.
Severe repetitive loss properties will be charged actuarial
based NFIP rates if the owner of the property has refused
FEMA's offer of flood mitigation measures, such as an elevation
or buy-out. The Director is authorized to offer the
policyholder a higher deductible for the flood insurance policy
which would result in a lower premium payment if mitigation is
refused.
Any owner of a severe repetitive loss property may appeal
an increase to an actuarial rate of insurance to an independent
third party. One of the grounds for appeal is that the owner of
the property will not be able to purchase a replacement primary
residence of comparable value that is functionally equivalent
to their current residence.
Up to an additional $40 million for fiscal years 2004,
2005, 2006, 2007, and 2008 may be transferred from the National
Flood Insurance Fund to the National Flood Mitigation Fund for
severe repetitive loss properties and will remain available
until expended. The policyholders will not be subject to higher
premium rates for flood insurance coverage because of this
transfer from the insurance fund into the mitigation fund. As a
matter of clarification, the policy service fee charged by FEMA
for each policy also will not be increased because of this
transfer.
It is the Committee's intent that States and communities
that receive grants under the Pilot Program will have a
mitigation plan approved under section 1366(c) of the National
Flood Insurance Act of 1968. This mitigation plan is different
than the plan which is necessary for certain States that
receive a partial waiver of the non-Federal cost share for
mitigation.
Section 5. Enhanced Authority in FMA Program
This section amends section 1366 of the National Flood
Insurance Act of 1968 by using the existing FMA program to
mitigate repetitive claims properties, which are defined as two
or more claims, with the cumulative value of such claims of
$5,000 or more, exceeding the amount of any applicable
deductible, within any 10 year time period. The Director of
FEMA must give first priority for funding to the activities for
repetitive claims properties that the Director determines are
the most cost-effective for the taxpayers of the United States
and are in the best interests of the National Flood Insurance
Fund. In this section, the effect of the refusal to mitigate
and the appeals process is the same as it is in section 4.
Up to an additional $20 million will be transferred from
the insurance fund into the mitigation fund for each fiscal
year. (This has been the current practice in recent
appropriations laws).
Up to an additional $40 million for fiscal years 2004,
2005, 2006, 2007, and 2008 may be transferred from the National
Flood Insurance Fund to the National Flood Mitigation Fund for
repetitive claims properties and will remain available until
expended. The policyholders will not be subject to higher
premium rates for flood insurance coverage because of this
transfer from the insurance fund into the mitigation fund. As a
matter of clarification, the policy service fee charged by FEMA
for each policy also will not be increased because of this
transfer.
As a matter of clarification, this section does not alter
the existing FMA program as it relates to non-repetitive claims
properties. Thus, these properties will continue to be eligible
for the FMA program if it is cost effective and in the best
interest of the NFIP.
Section 6. FEMA Authority to Fund Mitigation Activities for Individual
Repetitive Claims Properties
This section creates a new section 1323 of the National
Flood Insurance Act of 1968 by authorizing the Director to
provide funding for mitigation actions for repetitive claims
properties if those activities are in the best interest of the
National Flood Insurance Fund and cannot be funded under the
Flood Mitigation Assistance Program because either (1) the
requirements of the Flood Mitigation Assistance Program are not
being met by the State or community in which the property is
located; or (2) the State or community does not have the
capacity to manage such activities.
Up to an additional $10 million will be transferred from
the National Flood Insurance Fund into the National Mitigation
Fund for any fiscal year for these individual repetitive claims
properties. The policyholders will not be subject to offsetting
collections through premium rates for flood insurance coverage.
As a matter of clarification, the policy service fee charged by
FEMA for each policy shall also will not be increased because
of this transfer.
Section 7. Actuarial Rate Properties
This section amends section 1308 of the National Flood
Insurance Act of 1968 by charging actuarial based NFIP rates
immediately for Federally leased properties located on the
river-facing side of any dike, levee, or other riverine flood
control structure, or seaward of any seawall, or other coastal
flood control structure. These actuarial rates are not
conditioned upon any other factor.
Section 8. Removing Repetitive Claims Properties from Federal Disaster
Assistance Responsibility
This section amends section 582 of the National Flood
Insurance Reform Act of 1994 by providing that, if an owner of
either a severe repetitive loss property or a repetitive claims
property refuses an offer of mitigation, no Federal disaster
relief assistance can be used to make payment for repair,
replacement, or restoration of such property.
Section 9. Electronic Database of Repetitive Claims Properties
This section adds a new subsection to section 1364 of the
National Flood Insurance Act of 1968. Under this section, the
Director may, if the Director determines feasible, establish
and maintain a database identifying by location and address all
repetitive loss properties and severe repetitive loss
properties. If established, the Director will make the database
available to the public in a format that may be searched
electronically. The Committee notes that it is important that
FEMA continue to improve the quality of its database and make
corrections when buildings have been mitigated to remove those
buildings from the list.
Section 10. Replacement of Mobile Homes on Original Sites
This section adds a new section 1315 to the National Flood
Insurance Act of 1968 which provides that the replacement of
mobile homes on any sites will not affect the eligibility of
any community to participate in the flood insurance program if
(1) the mobile home was previously located on the site; (2) the
mobile home was relocated from the site because of flooding
that threatened or affected the site; and (3) the replacement
is conducted not later than the expiration of the 180-day
period that begins upon the subsidence (in the area of such
site) of the body of water that flooded to a level considered
lower than flood levels.
Section 11. Reiteration of FEMA Responsibility to Map Mudslides
This section provides that, as directed in section 1360(b)
of the National Flood Insurance Act, the Director of FEMA is
again directed to accelerate the identification of risk zones
within flood-prone and mudslide-prone areas in order to make
known the degree of hazard within each such zone at the
earliest possible date.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
NATIONAL FLOOD INSURANCE ACT OF 1968
* * * * * * *
TITLE XIII--NATIONAL FLOOD INSURANCE
* * * * * * *
CHAPTER I--THE NATIONAL FLOOD INSURANCE PROGRAM
* * * * * * *
ESTABLISHMENT OF CHARGEABLE PREMIUM RATES
Sec. 1308. (a) * * *
* * * * * * *
[(c) Subject only to the limitation under subsection (e), the
chargeable rate with respect to any property, the construction
or substantial improvement of which the Director determines has
been started after December 31, 1974, or the effective date of
the initial rate map published by the Director under paragraph
(2) of section 1360 for the area in which such property is
located, whichever is later, shall not be less than the
applicable estimated risk premium rate for such area (or
subdivision thereof) under section 1307(a)(1).]
(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 estimated
risk premium rate for such area (or subdivision thereof) under
section 1307(a)(1) with respect to the following 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
initial rate map published by the Director under
paragraph (2) of section 1360 for the area in which
such property is located, whichever is later, except
that the chargeable rate for properties under this
paragraph shall be subject to the limitation under
subsection (e).
(2) Properties refusing mitigation assistance.--Any
property for which the Director has taken action under
section 1362(g)(1) or 1366(i)(1).
(3) Certain leased coastal and river properties.--Any
property leased from the Federal Government (including
residential and nonresidential properties) that the
Director determines is located on the river-facing side
of any dike, levee, or other riverine flood control
structure, or seaward of any seawall or other coastal
flood control structure.
* * * * * * *
(e) Annual Limitation on Premium Increases.--
[Notwithstanding] Except with respect to properties described
under paragraph (2) or (3) of subsection (c) and
notwithstanding any other provision of this title, the
chargeable risk premium rates for flood insurance under this
title for any properties within any single risk classification
may not be increased by an amount that would result in the
average of such rate increases for properties within the risk
classification during any 12-month period exceeding 10 percent
of the average of the risk premium rates for properties within
the risk classification upon the commencement of such 12-month
period.
* * * * * * *
FINANCING
Sec. 1309. (a) All authority which was vested in the Housing
and Home Finance Administrator by virtue of section 15(e) of
the Federal Flood Insurance Act of 1956 (70 Stat. 1084)
(pertaining to the issue of notes or other obligations or the
Secretary of the Treasury), as amended by subsections (a) and
(b) of section 1303 of this Act, shall be available to the
Director for the purpose of carrying out the flood insurance
program under this title; except that the total amount of notes
and obligations which may be issued by the Director pursuant to
such authority (1) without the approval of the President, may
not exceed $500,000,000, and (2) with the approval of the
President, may not exceed $1,500,000,000 [through December 31,
2003, and] through the date specified in section 1319, and
$1,000,000,000 thereafter. The Director shall report to the
Committee on Banking, Finance and Urban Affairs of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate at any time when he requests the
approval of the President in accordance with the preceding
sentence.
* * * * * * *
NATIONAL FLOOD INSURANCE FUND
Sec. 1310. (a) To carry out the flood insurance program
authorized by this title, the Director shall establish in the
Treasury of the United States a National Flood Insurance Fund
(hereinafter referred to as the ``fund'') which shall be an
account separate from any other accounts or funds available to
the Director and shall be available as described in subsection
(f), without fiscal year limitation (except as otherwise
provided in this section)--
(1) * * *
* * * * * * *
(7) for transfers to the National Flood Mitigation
Fund, but only to the extent provided in section
1367(b)(1); [and]
[(8) for costs of preparing the report under section
577 of the Riegle Community Development and Regulatory
Improvement Act of 1994, except that the fund shall be
available for the purpose under this paragraph in an
amount not to exceed an aggregate of $5,000,000 over
the 2-year period beginning on the date of enactment of
the Riegle Community Development and Regulatory
Improvement Act of 1994.]
(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
(9) for funding, not to exceed $10,000,000 in any
fiscal year, for mitigation actions under section 1323,
except that, notwithstanding any other provision of
this title, amounts made available pursuant to this
paragraph shall not be subject to offsetting
collections through premium rates for flood insurance
coverage under this title.
* * * * * * *
STATE AND LOCAL LAND USE CONTROLS
Sec. 1315. (a) * * *
* * * * * * *
(c) Replacement of Mobile Homes on Original Sites.--
(1) Community participation.--The placement of any
mobile home on any site shall not affect the
eligibility of any community to participate in the
flood insurance program under this title and the Flood
Disaster Protection Act of 1973 (notwithstanding that
such placement may fail to comply with any elevation or
flood damage mitigation requirements), if--
(A) such mobile home was previously located
on such site;
(B) such mobile home was relocated from such
site because of flooding that threatened or
affected such site; and
(C) such replacement is conducted not later
than the expiration of the 180-day period that
begins upon the subsidence (in the area of such
site) of the body of water that flooded to a
level considered lower than flood levels.
(2) Definition.--For purposes of this subsection, the
term ``mobile home'' has the meaning given such term in
the law of the State in which the mobile home is
located.
* * * * * * *
PROGRAM EXPIRATION
Sec. 1319. No new contract for flood insurance under this
title shall be entered into [after December 31, 2003.] after
September 30, 2008.
* * * * * * *
GRANTS FOR REPETITIVE INSURANCE CLAIMS PROPERTIES
Sec. 1323. (a) In General.--The Director may provide funding
for mitigation actions that reduce flood damages to repetitive
claims properties, but only if the Director determines that--
(1) such activities are in the best interest of the
National Flood Insurance Fund; and
(2) such activities can not be funded under the
program under section 1366 because--
(A) the requirements of section 1366(g) are
not being met by the State or community in
which the property is located; or
(B) the State or community does not have the
capacity to manage such activities.
(b) Priority for Worst-Case Properties.--In determining
properties for which funding is to be provided under this
section, the Director shall give priority based on the amount
of losses to the National Flood Insurance Fund that claims for
a property have caused or are reasonably expected to cause.
(c) Definition.--For purposes of this section, the term
``repetitive claims property'' has the meaning given such term
in section 1366(n).
* * * * * * *
CHAPTER II--ORGANIZATION AND ADMINISTRATION OF THE FLOOD INSURANCE
PROGRAM
* * * * * * *
Part A--Industry Program With Federal Financial Assistance
* * * * * * *
EMERGENCY IMPLEMENTATION OF PROGRAM
Sec. 1336. (a) Notwithstanding any other provisions of this
title, for the purpose of providing flood insurance coverage at
the earliest possible time, the Director shall carry out the
flood insurance program authorized under chapter I [during the
period ending December 31, 2003, in accordance] during the
period ending on the date specified in section 1319, in
accordance with the provisions of this part and the other
provision of this title insofar as they relate to this part but
subject to the modifications made by or under subsection (b).
* * * * * * *
CHAPTER III--COORDINATION OF FLOOD INSURANCE WITH LAND-MANAGEMENT
PROGRAMS IN FLOOD-PRONE AREAS
* * * * * * *
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 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 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 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 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 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 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 used only for the following
activities:
(1) Mitigation activities.--To carry out mitigation
activities that reduce flood damages to severe
repetitive loss properties, including elevation,
relocation, 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 paragraph (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 activities 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
extent that the State or community involved is
required to contribute, for each severe
repetitive loss property for which grant
amounts are provided, 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'' includes
State or local agency funds, in-kind contributions, any
salary paid to staff to carry out the eligible
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 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 program 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
assistance 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 assistance in
a manner that permits States and communities 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 repetitive loss
property only if the following requirements are met:
(1) Use of property.--The State or community 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 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, accepted, or from which a
structure will be removed pursuant to a project
provided property acquisition and relocation assistance
under such section 404(b).
(2) Purchase price.--The amount of purchase 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;
and
(C) an amount equal to the fair market value
of the property immediately before the most
recent flood event affecting the property.
(g) Increase to Actuarial Rates 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 Director shall--
(A) notify each holder of a recorded interest
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
applicable estimated risk premium rate for such
area (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
determination 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 functionally equivalent.
(ii) As a result of such action, the
preservation or maintenance of any
prehistoric 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, impaired, or
disrupted.
(iii) The flooding that resulted in
the flood insurance claims described in
subsection (b)(2) for the property
resulted 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
Management Agency that were current at
the time and did not indicate that the
property was located in an area having
special flood hazards.
(B) Procedure.--An appeal under this
paragraph of a determination of the Director
shall be made by filing, with the Director, a
request for an appeal within 90 days after
receiving notice of such determination. Upon
receiving 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 subparagraph
(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).
(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 involved in
the appeal from the amount required
under paragraph (1) and the Director
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 increase 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 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
requesting the appeal, if the final
determination 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
describing the rules, procedures, and
administration for appeals under this
paragraph.
(h) Discretionary Actions in Cases of Fraudulent Claims.--If
the Director determines that a fraudulent 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 policyholder
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 Insurance 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 expended. 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.
* * * * * * *
NOTICE REQUIREMENTS
Sec. 1364. (a) * * *
* * * * * * *
(d) Electronic Database of Repetitive Claims Properties.--The
Director may, if the Director determines such action is
feasible, establish and maintain a database identifying by
location and address all repetitive claims properties (as such
term is defined in section 1366(n)), repetitive loss structures
(as such term is defined in section 1370), and severe
repetitive loss properties (as such term is defined in section
1362(b)). If established, the Director shall make the database
available to the public in a format that may be searched
electronically. Such a database shall not include any
information regarding ownership of properties.
* * * * * * *
MITIGATION ASSISTANCE
Sec. 1366. (a) * * *
* * * * * * *
(e) Eligible Mitigation Activities.--
(1) * * *
* * * * * * *
[(4) Priority.--The Director shall make every effort
to provide mitigation assistance under this section for
mitigation plans proposing activities for repetitive
loss structures and structures that have incurred
substantial damage.]
(4) Standard for assistance.--In providing grants
under this subsection for mitigation activities, the
Director shall give first priority for funding to
repetitive 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.
(5) Eligible activities.--The Director shall
determine whether mitigation activities described in a
mitigation plan submitted under subsection (d) comply
with the requirements under paragraph (1). Such
activities may include--
(A) * * *
* * * * * * *
(C) acquisition by States and communities of
properties (including public properties)
located in areas having special flood hazards
or other areas of flood risk and properties
substantially damaged by flood, [for public
use, as the Director determines is consistent
with sound land management and use in such
area] except that amounts provided under this
section may not be used for acquisition of any
property unless--
(i) the State or community 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
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, accepted, or from which a
structure will be removed pursuant to a
project provided property 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 immediately before the
most recent flood event
affecting the property;
* * * * * * *
(6) Notice.--Upon making an offer to conduct any
eligible mitigation activity under paragraph (5) with
respect to a repetitive claims property or a severe
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.
* * * * * * *
(f) Limitations on Amount of Assistance.--
(1) * * *
* * * * * * *
[(3) Waiver.--The Director may waive the dollar
amount limitations under paragraphs (1) and (2) for any
State or community for any 5-year period during which a
major disaster or emergency declared by the President
(pursuant to the Robert T. Stafford Disaster Relief and
Emergency Assistance Act) as a result of flood
conditions is in effect with respect to areas in the
State or community.]
(3) Waiver.--The Director may waive the dollar 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
Relief 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.
* * * * * * *
(j) Increase to Actuarial Rates in Cases of Refusal 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 interest
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
applicable 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
determination 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 functionally equivalent.
(ii) As a result of such action, the
preservation or maintenance of any
prehistoric 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, impaired, or
disrupted.
(iii) The flooding that resulted in
the flood insurance claims payments
described in subsection (n)(2) for the
property resulted 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
Management Agency that were current at
the time and did not indicate that the
property was located in an area having
special flood hazards.
(B) Procedure.--An appeal under this
paragraph of a determination of the Director
shall be made by filing, with the Director, a
request for an appeal within 90 days after
receiving notice of such determination. Upon
receiving 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 subparagraph
(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).
(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 involved in
the appeal from the amount required
under paragraph (1) and the Director
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 increase 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 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
requesting the appeal, if the final
determination in the appeal is that the
grounds under subparagraph (A) do not
exist; and
(ii) by the National Flood Mitigation
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
describing the rules, procedures, and
administration for appeals under this
paragraph, which shall be submitted together
with the report required under section
1362(g)(2)(E).
[(k) Definition of Community.--For purposes of this section,
the term ``community'' means--
[(1) a political subdivision that (A) has zoning and
building code jurisdiction over a particular area
having special flood hazards, and (B) is participating
in the national flood insurance program; or
[(2) a political subdivision of a State, or other
authority, that is designated to develop and administer
a mitigation plan by political subdivisions, all of
which meet the requirements of paragraph (1).]
(k) Discretionary Actions in Cases of Fraudulent Claims.--If
the Director determines that a fraudulent claim was made under
flood insurance coverage under this title for a repetitive
claims 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 policyholder
upon expiration and deny the provision of any new flood
insurance coverage under this title to such
policyholder for the property.
[(j)] (l) Reports.--Not later than 1 year after the date of
enactment of the Riegle Community Development and Regulatory
Improvement Act of 1994 and biennially thereafter, the Director
shall submit a report to the Congress describing the status of
mitigation activities carried out with assistance provided
under this section.
(m) Coordination With States and Communities.--The Director
shall, in consultation and coordination with States and
communities:
(1) Identification of repetitive claims properties.--
Identify repetitive claims properties and properties at
risk of becoming repetitive claims properties.
(2) Management of 100-year floodplain.--Take such
actions as are appropriate to encourage and improve
participation of owners of properties that are not
located in areas having special flood hazards but are
located within the 100-year floodplain.
(n) Definitions.--For purposes of this section:
(1) Community.--The term ``community'' means--
(A) a political subdivision that--
(i) has zoning and building code
jurisdiction over a particular area
having special flood hazards; and
(ii) is participating in the national
flood insurance program; or
(B) a political subdivision of a State, or
other authority, that is designated to develop
and administer a mitigation plan and manage
projects by political subdivisions, all of
which meet the requirements of subparagraph
(A).
(2) Repetitive claims property.--The term
``repetitive claims property'' means, without regard to
the ownership of the property, a property with respect
to which claim payments for losses have been made--
(A) under flood insurance coverage under this
title,
(B) on more than one occasion within a 10-
year period, and
(C) for which the cumulative value of the
amount by which such claims exceed the amount
of any applicable deductible under such
coverage is $5,000 or more,
The Director may, by regulation, further define subsets
of repetitive claims properties for purposes of
subsection (e)(4).
NATIONAL FLOOD MITIGATION FUND
Sec. 1367. (a) * * *
* * * * * * *
(b) Credits.--The National Flood Mitigation Fund shall be
credited with--
[(1) amounts from the National Flood Insurance Fund,
in amounts not exceeding--
[(A) $10,000,000 in the fiscal year ending
September 30, 1994;
[(B) $15,000,000 in the fiscal year ending
September 30, 1995;
[(C) $20,000,000 in the fiscal year ending
September 30, 1996; and
[(D) $20,000,000 in each fiscal year
thereafter;]
(1) in each fiscal year, amounts from the National
Flood Insurance Fund not exceeding $20,000,000;
(2) in each of fiscal years 2004, 2005, 2006, 2007,
and 2008, in addition to amounts under paragraph (1),
amounts from the National Flood Insurance Fund not
exceeding $40,000,000, to remain available until
expended, except that--
(A) such amounts shall be used only under
section 1366 for mitigation activities for
repetitive claims properties (as such term is
defined in section 1366(n)); and
(B) notwithstanding any other provision of
this title, amounts made available pursuant to
this paragraph shall not be subject to
offsetting collections through premium rates
for flood insurance coverage under this title;
and
[(2)] (3) any penalties collected under section
102(f) of the Flood Disaster Protection Act of 1973;
and
[(3)] (4) any amounts recaptured under section
1366(i).
* * * * * * *
CHAPTER IV--APPROPRIATIONS AND MISCELLANEOUS PROVISIONS
* * * * * * *
APPROPRIATIONS
Sec. 1376. (a) * * *
* * * * * * *
(c) There are authorized to be appropriated such sums as may
be necessary [through December 31, 2003, for studies under this
title.] through the date specified in section 1319, for studies
under this title.
* * * * * * *
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SECTION 582 OF THE NATIONAL FLOOD INSURANCE REFORM ACT OF 1994
* * * * * * *
SEC. 582. PROHIBITED FLOOD DISASTER ASSISTANCE.
(a) * * *
* * * * * * *
(d) Unmitigated Repetitive Insurance Claims Properties.--
Notwithstanding any other provision of law, no Federal disaster
relief assistance made available in a flood disaster area may
be used to make a payment (including any loan assistance
payment) for repair, replacement, or restoration for damage to
a property located in such area if--
(1) such property is a repetitive claims property (as
such term is defined in section 1366(n) of the National
Flood Insurance Act of 1968 (42 U.S.C. 4104c(o)) or a
severe repetitive loss property (as such term is
defined in section 1362(b) of such Act (42 U.S.C.
4103(b)); and
(2) in accordance with such requirements as the
Director may establish, mitigation assistance under
section 1362 or 1366 of the National Flood Insurance
Act of 1968 has been offered to the owner of the
property, before or after the occurrence of the flood
loss events, which was refused by the owner.
[(d)] (e) Definition.--For purposes of this section, the term
``flood disaster area'' means an area with respect to which--
(1) * * *
* * * * * * *
[(e)] (f) Effective Date.--This section and the amendments
made by this section shall apply to disasters declared after
the date of enactment of this Act.
* * * * * * *