[DOCID: f:hr410.109]
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109th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 109-410
======================================================================
FLOOD INSURANCE REFORM AND MODERNIZATION ACT OF 2006
_______
April 6, 2006.--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
together with
ADDITIONAL VIEWS
[To accompany H.R. 4973]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred the
bill (H.R. 4973) to restore the financial solvency of the
national flood insurance program, and for other purposes,
having considered the same, report favorably thereon without
amendment and recommend that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 5
Committee Consideration.......................................... 5
Committee Votes.................................................. 5
Committee Oversight Findings..................................... 6
Performance Goals and Objectives................................. 7
New Budget Authority, Entitlement Authority, and Tax Expenditures 7
Committee Cost Estimate.......................................... 7
Congressional Budget Office Estimate............................. 7
Federal Mandates Statement....................................... 12
Advisory Committee Statement..................................... 12
Constitutional Authority Statement............................... 12
Applicability to Legislative Branch.............................. 12
Section-by-Section Analysis of the Legislation................... 12
Changes in Existing Law Made by the Bill, as Reported............ 16
Additional Views................................................. 25
Purpose and Summary
The purpose of H.R. 4973 is to restore the financial
solvency of the National Flood Insurance Program and to
increase the accountability of the Federal Emergency Management
Agency with respect to its administration of the program.
The Flood Insurance Reform and Modernization Act of 2006
(``FIRM'') increases the borrowing authority for the National
Flood Insurance Program to $25 billion to help cover its
contractual obligations to flood insurance policyholders,
directs the Federal Emergency Management Agency to institute
reforms in the program, increases the penalties for failure to
enforce mandatory flood policy purchase requirements, and
requires a study on: 1) pre-FIRM properties (those built before
1974) that currently receive subsidized flood insurance rates;
2) mandatory purchase requirement for the natural 100-year
floodplain; and 3) mandatory purchase requirement for non-
federally related loans and the Constitutionality of such
requirement. This Act also includes numerous key reforms,
including a phase-in of actuarial rates for vacation homes,
second homes, and nonresidential properties.
Background and Need for Legislation
The National Flood Insurance Program (NFIP) was created as
part of the National Flood Insurance Act of 1968 to enable the
Federal government to help cover the cost of flood damages.
Prior to that time, insurance companies generally did not offer
coverage for flood disasters because of the high risks
involved. The legislation as amended in 1973 and 1994
authorizes the Federal Insurance Administration (FIA) and
Mitigation Directorate to administer the NFIP as part of the
Federal Emergency Management Agency (FEMA). Although FEMA has
now been absorbed into the Department of Homeland Security, the
NFIP continues to operate as it had before restructuring.
Since 1986, the NFIP has been financially self-supporting
for the average historical loss year. Consistent with statute,
the NFIP borrowed from the U.S. Treasury during those years in
which the nation experienced unusually high flood losses. These
loans were repaid to the Treasury, with interest, from
policyholder premiums and related fees.
National Flood Insurance Program claims liabilities arising
from Hurricanes Katrina and Rita are estimated at between $23
and $25 billion, far surpassing the total claims paid in the
entire history of the NFIP. On September 20, 2005, the
President signed into law the National Flood Insurance Enhanced
Borrowing Authority Act of 2005 (P.L. 109-65), which authorized
the NFIP temporarily to borrow up to $3.5 billion from the U.S.
Treasury to pay claims. H.R. 4133, signed into law by the
President on November 21, 2005, as P.L. 109-106, further
increased FEMA's borrowing authority to $18.5 billion. A third
borrowing authority increase (S. 2275) was signed into law on
March 23, 2006 (P.L. 109-208) and increased FEMA's borrowing
authority to $20.775 billion.
Despite the three borrowing authority increases, the NFIP
will not have enough funds to pay all outstanding claims
without another increase. FEMA estimates that they will deplete
these funds no later than August, 2006. In the absence of
additional borrowing authority, FEMA would eventually advise
those insurance companies participating in the NFIP ``Write-
Your-Own'' program (companies that sell flood policies on
FEMA's behalf) that due to the absence of borrowing authority,
the companies should stop processing claims. Given FEMA's legal
obligation to pay the estimated 225,000 Katrina and Rita-
relatedclaims, homeowners who are not paid could initiate legal
action against the U.S. Government. The increased borrowing authority
(to $25 billion) in H.R. 4973 would ensure that all claims would be
paid.
The dramatic impact of the 2005 hurricanes on the NFIP has
highlighted the need for reforms to the program. Some much-
needed reforms, passed by Congress as part of the Bunning-
Bereuter-Blumenauer Flood Insurance Reform Act of 2004, have
yet to be implemented almost two years after that legislation
was signed into law. Among the 2004 reforms are provisions to
address costly repetitive flood-loss properties. A pilot
program to allow communities to receive funding for flood
mitigation activities was not funded for the first two years
for which it was authorized and is set to expire in 2009. H.R.
4973 would extend the program into 2011 in order to reflect the
original intent of the Flood Insurance Reform Act of 2004.
H.R. 4973 further directs FEMA to continue to work with the
insurance industry, state insurance regulators, and other
interested parties to implement the minimum training and
education standards for all insurance agents who sell flood
insurance policies that FEMA established under the notice
published September 1, 2005 (70 Fed. Reg. 52117) pursuant to
section 207 of the Bunning-Bereuter-Blumenauer Flood Insurance
Reform Act of 2004 (42 U.S.C. 4011 note). FEMA is also directed
to finalize and confirm the establishment of an appeals process
through which holders of a flood insurance policy could appeal
decisions with respect to claims and proof of loss and to
submit a report to Congress on the status of the implementation
of all the 2004 reforms. Though the Committee recognizes that
the hurricanes of 2005 and the series of catastrophic events in
Florida in 2004 have occupied FEMA's resources, these reforms
must be implemented.
Using the 2004 reforms as a foundation, H.R. 4973 requires
FEMA to take steps that will make the NFIP more actuarially
sound. Under the current program guidelines, structures built
before 1974 or before the issuance of an area Flood Insurance
Rate Map (maps that designate the 100-year floodplain) are
known as ``pre-FIRM'' properties and are paying subsidized
flood insurance rates. While some have called for actuarial
rates on all pre-FIRM properties, the increased premiums would
be a burden to some homeowners. H.R. 4973 therefore calls for
the phased-in elimination subsidies only for pre-FIRM
nonresidential properties, vacation homes, and second homes.
This will ease the transition to higher prices, while still
providing millions of dollars of much-needed additional funding
for the NFIP. During Committee consideration of H.R. 4973, an
amendment was offered that called for elimination of all
subsidies on pre-FIRM properties at the time these properties
are sold. The Committee intends to further review the potential
impacts of this proposed reform, which was not incorporated
into the final Committee-approved bill.
Other provisions of this legislation that will help make
the NFIP more actuarially sound include an increase in fines
for federally-regulated lending institutions that do not
enforce mandatory purchase requirements from $350 to $2,000; an
increase in the cap that any one lending institution can be
fined in a given year from $100,000 to $1,000,000;
authorization for FEMA to increase flood insurance premiums up
to 15 percent annually on all properties; requirement of notice
in RESPA good faith estimates that homeowners who are not
legally obligated to purchase flood insurance under the
mandatory purchase requirement can purchase an NFIP policy and
escrow flood insurance payments; and a requirement that the
Comptroller General study the possible extension of mandatory
flood insurance purchase requirement to properties secured by
non-federally related loans.
H.R. 4973 includes a number of much-needed reforms that
will modernize the program and at the same time increase the
amount of premiums generated. Coverage limits for NFIP flood
insurance policies have remained static since 1994, without
adjustment for inflation, and despite the fact that housing
prices have multiplied in many areas. This legislation takes a
reasonable approach by simply adjusting the current coverage
limits to account for inflation. Coverage limits for
residential properties will be increased from $250,000 to
$335,000 and limits for residential contents coverage will be
raised from $100,000 to $135,000. Coverage limits for
nonresidential properties will be increased from $500,000 to
$670,000.
While structural damage is the most obvious by-product of
flooding, other harms occur that can be just as devastating.
One of the greatest expenses to FEMA following the 2005
hurricanes was for hotel rooms for displaced homeowners. H.R.
4973 would provide for $1,000 of living expenses for
policyholders after a flood. Finished basements are not
currently covered by a standard flood insurance policy. This
legislation allows the NFIP to offer additional coverage to
protect such basements at actuarial prices. Businesses also
face other costs as a result of flooding that are not currently
able to be covered by the NFIP; for example, a business that is
flooded and cannot operate must still pay an assortment of
expenses, including leases and payroll. This Act would allow
commercial policyholders to purchase business interruption
coverage at actuarial prices. Finally, replacement cost of
contents coverage is made available as an option--again, at
actuarial prices.
Because flood insurance policy requirements and rates are
dependent on flood maps, these maps must be modernized to
preserve the integrity of the program. Flood elevation maps
must also be current so that homeowners in areas affected by
events such as Hurricane Katrina can rebuild to proper levels
after flooding. H.R. 4973 directs FEMA to certify the
modernization of all flood maps and to map the 500-year
floodplain, which will help homeowners across the country
better understand their flood risks. For purposes of map
modernization, $300 million is authorized for each of fiscal
years 2007 through 2012. The bill also directs FEMA to maintain
an inventory of all levees located in the U.S. and calls for a
study on extending the mandatory purchase requirement to those
structures protected by levees in the 100-year floodplain. As
noted during markup of H.R. 4973, the Committee understands the
importance of reviewing the status and condition of the
nation's levees and will work to ensure that the NFIP
incorporates updated information about the condition of these
levees when establishing flood insurance premium rates. This
legislation also requires FEMA to keep Congress informed about
the progress of its mapping program by submitting annual
reports and authorizes FEMA to hire additional staff to carry
out this and other provisions of the bill.
Finally, in order for the NFIP to maintain adequate levels
of solvency and operate efficiently, H.R. 4973 requires FEMA to
submit a report to Congress on the financial status of the NFIP
twice a year. Reforming the NFIP will be an ongoing process,
and Congress needs up-to-date information in order to make
informed policy decisions.
Hearings
No hearings were held on this legislation.
Committee Consideration
The Committee on Financial Services met in open session on
March 15, 2006, to consider a Committee Print entitled ``Flood
InsuranceReform and Modernization Act of 2006''. The Committee
Print, as amended, was introduced as H.R. 4973, and the Committee
ordered H.R. 4973 reported to the House by voice vote on March 16,
2006.
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. 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 amendment to the Committee Print was decided
by a record vote. The names of Members voting for and against
follow:
An amendment offered by Mr. Hensarling, No. 6,
providing for immediate termination of subsidized
rates, was NOT AGREED TO by a record vote of 10 yeas
and 45 nays (Record vote no. FC-14).
RECORD VOTE NO. FC-14
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley...................... ........ X ......... Mr. Frank (MA)... ........ X .........
Mr. Leach...................... ........ X ......... Mr. Kanjorski.... ........ X .........
Mr. Baker...................... ........ ........ ......... Ms. Waters....... ........ X .........
Ms. Pryce (OH)................. ........ X ......... Mr. Sanders...... ........ X .........
Mr. Bachus..................... X ........ ......... Mrs. Maloney..... ........ X .........
Mr. Castle..................... ........ X ......... Mr. Gutierrez.... ........ X .........
Mr. Royce...................... X ........ ......... Ms. Velazquez.... ........ ........ .........
Mr. Lucas...................... ........ X ......... Mr. Watt......... ........ ........ .........
Mr. Ney........................ ........ X ......... Mr. Ackerman..... ........ ........ .........
Mrs. Kelly..................... ........ X ......... Ms. Hooley....... ........ X .........
Mr. Paul....................... ........ ........ ......... Ms. Carson....... ........ X .........
Mr. Gillmor.................... ........ ........ ......... Mr. Sherman...... ........ X .........
Mr. Ryun (KS).................. ........ X ......... Mr. Meeks (NY)... ........ X .........
Mr. LaTourette................. ........ X ......... Ms. Lee.......... ........ X .........
Mr. Manzullo................... ........ X ......... Mr. Moore (KS)... ........ X .........
Mr. Jones (NC)................. ........ X ......... Mr. Capuano...... ........ X .........
Mrs. Biggert................... ........ X ......... Mr. Ford......... ........ ........ .........
Mr. Shays...................... ........ X ......... Mr. Hinojosa..... ........ ........ .........
Mr. Fossella................... ........ X ......... Mr. Crowley...... ........ X .........
Mr. Gary G. Miller (CA)........ ........ X ......... Mr. Clay......... ........ X .........
Mr. Tiberi..................... ........ X ......... Mr. Israel....... ........ ........ .........
Mr. Kennedy (MN)............... ........ ........ ......... Mrs. McCarthy.... ........ X .........
Mr. Feeney..................... X ........ ......... Mr. Baca......... ........ ........ .........
Mr. Hensarling................. X ........ ......... Mr. Matheson..... ........ X .........
Mr. Garrett (NJ)............... X ........ ......... Mr. Lynch........ ........ ........ .........
Ms. Brown-Waite (FL)........... ........ X ......... Mr. Miller (NC).. ........ X .........
Mr. Barrett (SC)............... X ........ ......... Mr. Scott (GA)... ........ X .........
Ms. Harris..................... ........ X ......... Mr. Davis (AL)... ........ X .........
Mr. Renzi...................... ........ X ......... Mr. Al Green (TX) ........ X .........
Mr. Gerlach.................... ........ X ......... Mr. Cleaver...... ........ ........ .........
Mr. Pearce..................... X ........ ......... Ms. Bean......... ........ X .........
Mr. Neugebauer................. ........ ........ ......... Ms. Wasserman ........ X .........
Schultz.
Mr. Price (GA)................. X ........ ......... Ms. Moore (WI)... ........ ........ .........
Mr. Fitzpatrick (PA)........... ........ X .........
Mr. Davis (KY)................. ........ X .........
Mr. McHenry.................... X ........ .........
Mr. Campbell).................. X ........ .........
----------------------------------------------------------------------------------------------------------------
Mr. Sanders is an independent, but caucuses with the Democratic Caucus.
The Committee considered the following other amendments:
An amendment offered by Ms. Wasserman Schultz, No. 1,
requiring FEMA participation in state disaster claims
mediation programs, was AGREED TO by a voice vote.
An amendment offered by Mr. Frank, No. 2, dealing
with post-disaster flood elevation determinations, was
AGREED TO by a voice vote.
An amendment offered by Mr. Price (on behalf of Mr.
Hensarling), No. 3, striking the increase in coverage
limits, was NOT AGREED TO by a voice vote.
An amendment offered by Mr. Watt, No. 4, providing
emergency authorization for CDBG for areas impacted by
Hurricane Katrina, was WITHDRAWN.
An amendment offered by Mr. Miller of California, No.
5, establishing penalties against regulated lending
institution or enterprise, was AGREED TO by a voice
vote.
An amendment offered by Mr. Hensarling, No. 7,
striking section 8 (coverage for additional living
expenses), was NOT AGREED TO by a voice vote.
An amendment offered by Mr. Hensarling, No. 8,
decreasing borrowing authority, was NOT AGREED TO by a
voice vote.
An amendment offered by Mr. Garrett, No. 9, changing
``properties'' to ``certain pre-firm properties'', was
WITHDRAWN.
An amendment offered by Mr. Garrett, No. 10, to
identify conditions of levees, was WITHDRAWN.
An amendment offered by Mr. Garrett, No. 11, insert
after ``feasibility of'', ``, and basis under the
Constitution of the United States for,'' 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 held a hearing and 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 goal of H.R. 4973 is to restore the financial solvency
of the National Flood Insurance Program and to increase the
accountability of the Federal Emergency Management Agency with
respect to its administration of the program.
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 estimates of new 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. The
Congressional Budget Office estimates that reforms to the
National Flood Insurance Program that would be initiated by
H.R. 4973 would result in savings of $400 million over the
2007-2011 period and by about $1.5 billion over the 2007-2016
period. Changes in direct spending associated with this
legislation are directly related to the fact that this bill
addresses the need for an increase in the Program's borrowing
authority necessary to fulfill the Program's legal obligation
to pay claims arising from last year's hurricanes. This
existing obligation must be considered under current law and
budgetary scorekeeping rules.
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:
April 4, 2006.
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. 4973, the Flood
Insurance Reform and Modernization Act of 2006.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Julie
Middleton.
Sincerely,
Donald B. Marron,
Acting Director.
Enclosure.
H.R. 4973--Flood Insurance Reform and Modernization Act of 2006
Summary: H.R. 4973 would increase the amount that the
Federal Emergency Management Agency (FEMA) can borrow from the
U.S. Treasury to cover expenses of the National Flood Insurance
Program (NFIP). Under the legislation, FEMA's borrowing
authority would increase from $20.8 billion to $25.0 billion.
As a result, CBO estimates that enacting H.R. 4973 would
increase direct spending by $1.4 billion in 2006 and $2.8
billion in 2007. By raising certain civil penalties, the bill
would also increase governmental receipts (revenues) by an
estimated $1 million per year.
In addition, the bill would reform the NFIP by requiring
FEMA to phase in actuarially sound premium rates for flood
insurance on commercial and nonprimary residences (i.e., second
and vacation homes). H.R. 4973 also would authorize FEMA to
expand the flood insurance program to include new types of
insurance and higher dollar limits on the amount of coverage
available. The bill would raise the cap on the average annual
premium increase allowed for each risk category from 10 percent
to 15 percent.
H.R. 4973 would increase the authorization of
appropriations for FEMA's flood mitigation and flood mapping
programs. Assuming appropriation of the authorized amounts, CBO
estimates that resulting outlays would total about $1.1 billion
over the 2007-2011 period and an additional $735 million after
that period.
H.R. 4973 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA) and would not affect
the budgets of state, local, or tribal governments. H.R. 4973
would impose a private-sector mandate on certain mortgage
lenders. Based on information from industry and government
sources, CBO expects the direct costs to comply with the
mandate would fall below the annual threshold for private-
sector mandates established in UMRA ($128 million in 2006,
adjusted annually for inflation).
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 4973 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--
-----------------------------------------------------------------
2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING \1\
Net Spending Under Current Law for Flood
Insurance:
Estimated Budget Authority................ 20,775 0 0 0 0 0
Estimated Outlays......................... 20,775 0 0 0 0 0
Proposed Changes:
Estimated Budget Authority................ 1,425 2,800 0 0 0 0
Estimated Outlays......................... 1,425 2,800 0 0 0 0
Net Spending Under H.R. 4973 for Flood
Insurance:
Estimated Budget Authority................ 22,200 2,800 0 0 0 0
Estimated Outlays......................... 22,200 2,800 0 0 0 0
SPENDING SUBJECT TO APPROPRIATION
Spending Under Current Law for Flood
Mitigation and Mapping:
Budget Authority.......................... 226 0 0 0 0 0
Estimated Outlays......................... 223 211 73 30 0 0
Proposed Changes:
Authorization Level....................... 0 300 300 300 340 340
Estimated Outlays......................... 0 70 195 255 300 325
Spending Under H.R. 4973 for Flood Mitigation
and Mapping:
Authorization Level....................... 226 300 300 300 340 340
Estimated Outlays......................... 223 281 268 285 300 325
----------------------------------------------------------------------------------------------------------------
\1\ In addition, CBO estimates that revenues would increase by about $1 million a year over the 2007-2016
period.
Basis of estimate: CBO estimates that enacting H.R. 4973
would increase direct spending by $1.4 billion in 2006 and $2.8
billion in 2007. In addition, assuming appropriation of the
authorized amounts, CBO estimates that implementing the bill
would add $1.1 billion to discretionary outlays over the 2007-
2011 period and an additional $735 million after that period.
Direct spending
Increase in Borrowing Authority. Through the NFIP, FEMA
offers flood insurance in communities that conform to the
program's standards for flood plain management. Under current
law, if premiums from policy sales and interest income are
insufficient to cover the program's costs, FEMA can borrow up
to $20.8 billion from the U.S. Treasury. H.R. 4973 would
increase the limit on FEMA's borrowing authority to $25.0
billion. Based on information from FEMA about the likely need
to pay claims in response to recent hurricanes and the
historical rate of claims processing for major floods, CBO
expects that the agency would exercise some of that authority
in 2006 and the rest in 2007, resulting in additional outlays
of $1.4 billion in 2006 and $2.8 billion in 2007.
Current law requires FEMA to repay any borrowed funds (with
interest) as it collects premiums, provided that the program's
other costs are fully covered. However, CBO expects that the
agency would be unlikely to repay funds borrowed under H.R.
4973 within the next 10 years because premium collections over
that period will probably be used to pay interest on FEMA's
debt and future flood insurance claims and expenses. The agency
is likely to face additional claims of $800 million to $1
billion per year for flooding events around the country that
typically occur each year. FEMA also will face debt-service
costs of about $600 million in 2006 and over $1 billion in 2007
and subsequent years. CBO expects the program will have
insufficient funds to pay all of those costs over the next 10
years.
Pre-FIRM Rate Increase. H.R. 4973 would authorize the NFIP
to gradually increase rates on properties that are either
nonresidential structures or not primary residences (such as
vacation homes) that were built before the community's flood
insurance rate map (FIRM) was completed (or before 1975,
whichever is later). Such properties are known as pre-FIRM
structures. Under current law and policies, most pre-FIRM
structures are charged a flood insurance premium that is less
than the full actuarial cost of the insurance. Thus, such
policies are considered to be subsidized by the program. The
bill would authorize FEMA to increase rates on those specified
types of properties by 15 percent a year until the actuarial
rate is achieved.
According to FEMA, approximately 450,000 properties meet
those criteria, and the average premium for those properties is
about $800 a year. CBO expects that owners of some of those
properties would either drop flood insurance coverage or reduce
their level of coverage in response to an increase in premium
charges. In addition, CBO anticipates that the premiums on
about 10 percent of the targeted properties would actually
decrease as a result of this bill. CBO estimates that reducing
the subsidy on these properties would increase receipts from
flood insurance premiums by $400 million over the 2007-2011
period and by about $1.5 billion over the 2007-2016 period.
CBO anticipates that any additional receipts generated by
increasing insurance premiums on those properties would be
spent on paying future flood insurance claims that it would
otherwise not have the resources to pay under current law--
resulting in no net budgetary impact.
Increased Coverage Limits and New Lines of Coverage. H.R.
4973 would increase the total amount of flood insurance that
residential customers can buy from $350,000 to $470,000. The
bill also would increase the total amount of flood insurance
that commercial businesses can buy from $1 million to $1.3
million. In addition, the bill would authorize FEMA to offer
four new lines of optional insurance coverage--for living
expenses and basement repairs for residential properties,
business interruption for commercial properties, and additional
contents coverage for residential and commercial property.
The NFIP currently has approximately 4.7 million policies
in force, with a total exposure of nearly $800 billion. Those
policyholders pay over $2 billion in premiums to the federal
government annually. CBO assumes that the increased coverage
limits and new lines of coverage would be offered to
policyholders when they initiate or renew their coverage. The
new coverage would be offered at actuarial rates. These new
lines of coverage would increase premium receipts to the
federal government, which would be roughly offset by additional
claims payments.
Increase in Annual Limitation on Rate Increases. H.R. 4973
would authorize the NFIP to increase rates on policies within a
specified risk category by an average of 15 percent per year.
Under current law, the limit on rate increases is 10 percent.
CBO estimates that raising this limit would have no significant
impact on the federal budget because FEMA has not increased
rates by as much as 10 percent in the past and does not appear
to be constrained in its rate-setting process by the current
cap on premiums. If additional receipts were generated as a
result of this provision, CBO expects that such funds would be
spent to pay future flood insurance claims that it would
otherwise not have the resources to pay under current law--
resulting in no net budgetary impact.
Civil Penalties. Section 6 of H.R. 4973 would increase the
civil penalty from $350 to $2,000 for lenders that do not
enforce the mandatory purchase requirement. CBO estimates that
the increased revenue from the civil penalties established
under this bill would amount to about $1 million a year.
Spending subject to appropriation
Mitigation of Severe-Repetitive-Loss Properties. Section 13
would extend for two years the authorization of appropriations
for the mitigation pilot program that funds preventive measures
for properties that have sustained four or more losses totaling
more than $20,000, or two or more losses that cumulatively
exceed the value of the property. Under current law, up to $40
million a year from the National Flood Insurance Fund can be
used for this program through 2009. Based on historical outlay
rates for mitigation projects, CBO estimates that implementing
this section would cost about $45 million over the 2007-2011
period and an additional $35 million after that period.
Flood Mapping Program. Section 16 would authorize the
appropriation of $300 million a year over the 2007-2012 period
for updating flood maps to include the 500-year flood plain and
areas that would be flooded if a dam or levee failed. In
addition, the bill would reestablish the Technical Mapping
Advisory Council to assist with managing flood mapping
activities. Based on historical outlay rates for this program,
CBO estimates that implementing this section would cost $1.1
billion over the 2007-2011 period and an additional $700
million in subsequent years.
GAO Study. Section 3 would authorize the Government
Accountability Office (GAO) to conduct a study to assess the
status of pre-FIRM properties and the feasibility of extending
the mandatory purchase requirement to nonfederally insured
mortgages and those properties in the ``natural'' 100-year
flood plain (i.e., those properties behind levees and dams).
CBO estimates that this provision would cost less than $500,000
in fiscal year 2007.
Staff Increases. Section 19 of the bill would authorize
FEMA to hire additional staff to implement the provisions of
this bill. Under current law, the NFIP collects about $125
million a year from administrative fees that are collected in
conjunction with annual insurance premiums. Subject to
appropriation, those fees can be spent on salaries and expenses
related to flood insurance operations and flood mitigation. The
amount of increased administrative costs that would result from
the bill is uncertain because FEMA does not yet know how it
would implement various provisions. If staffing increases were
significant, however, it is likely that the NFIP would raise
the administrative fees assessed on policyholders, and that
added income from those fees would offset the increased
spending on salaries and expenses.
Estimated Impact on State, local, and tribal governments:
H.R. 4973 contains no intergovernmental mandates as defined in
UMRA and would not affect the budgets of state, local, or
tribal governments.
Estimated impact on the private sector: H.R. 4973 would
impose a private-sector mandate, as defined in UMRA, on certain
mortgage lenders. Based on information from industry and
government sources, CBO expects the direct costs to comply with
the mandate would be small--less than the annual threshold for
private-sector mandates established in UMRA ($128 million in
2006, adjusted annually for inflation).
Under current law, mortgage lenders that make federally-
related mortgages are required to provide a good faith estimate
of the amount or range of charges the borrower is likely to
incur for specific settlement services. The bill would require
such mortgage lenders to include in each estimate a conspicuous
statement that flood insurance coverage for residential real
estate is generally available under the National Flood
Insurance Program, whether or not the real estate is located in
an area subject to special flood hazards, and that, to obtain
such coverage, a homeowner or purchaser should contact a
property insurance agent, broker, or company. The good faith
estimate would also be required to contain the statement that
the escrowing of flood insurance payments is required for many
loans under section 102(d) of the Flood Disaster Protection Act
of 1973, and may be a convenient and available option with
respect to other loans. According to industry representatives,
the cost for mortgage lenders to include additional statements
in such an estimate would be minimal.
Estimated prepared by: Federal Costs: Julie Middleton and
Perry Beider. Impact on State, Local, and Tribal Governments:
Melissa Merrell. Impact on the Private Sector: Paige Paper/
Bach.
Estimate approved by: Robert A. Sunshine, 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
general welfare of the United States) and clause 3 (relating to
the power to regulate 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 and table of contents
This section establishes the short title of the bill, the
``Flood Insurance Reform and Modernization Act of 2006.'' This
section also contains a table of contents, setting out the
title of each subsequent section.
Section 2. Findings and purposes
This section sets forth certain findings regarding the need
for reform of and increased borrowing authority for the
national flood insurance program. This section also establishes
the purposes of the Act.
Section 3. Study regarding status of pre-FIRM properties and mandatory
purchase requirement for natural 100-year floodplain and non-
federally related loans
This section requires the Comptroller General of the United
States to conduct a study on the effects of extending the
mandatory flood insurance purchase requirement to all
properties located in a flood hazard area, whether or not the
mortgage on the property is federally-backed. This section also
requires the Comptroller General to study coverage for pre-FIRM
properties (properties built before 1974 that receive
subsidized insurance rates), as well as the effects of
extending the mandatory purchase requirement to properties
protected by dams and levees. This report is to be submitted to
the Congress no later than 6 months from the enactment of this
Act.
Section 4. Phase-in of actuarial rates for nonresidential properties
and non-primary residences
This section amends section 1308(c) of the National Flood
Insurance Act of 1968 (42 U.S.C. 4015(c)) by establishing that
nonresidential properties and non-primary residences will be
charged actuarial, instead of subsidized, rates. This change to
actuarial pricing for these properties will be implemented over
time.
Section 5. Reduction of waiting period for effective date of policies
This section amends subsection (c)(1) of section 1306 of
the National Flood Insurance Act of 1968 (42 U.S.C. 4013(c)(1))
by reducing the number of days a newly-purchased or modified
flood insurance policy will become effective from 30 days to 15
days.
Section 6. Enforcement
This section amends paragraph (5) of section 102(f) of the
Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a) by
increasing to $2,000 the fine levied against federally-
regulated lending institutions for each failure to enforce
mandatory flood insurance purchase requirements and increasing
the year cap on fines for institutions to $1,000,000.
Section 7. Maximum coverage limits
This section amends subsection (b) of section 1306 of the
National Flood Insurance Act of 1968 (42 U.S.C. 4013(b)) by
increasing the maximum coverage limits for flood insurance
policies to reflect inflation. New coverage limits would be
$335,000 for residences; $135,000 for residential contents; and
$670,000 for businesses and churches.
Section 8. Coverage for additional living expenses, basement
improvements, business interruption, and replacement cost of
contents
This section amends subsection (b) of section 1306 of the
National Flood Insurance Act of 1968 (42 U.S.C. 4013) by
requiring FEMA to include in each renewal or new contract for
flood insurance at least $1,000 for living expenses following a
flood event. This section also requires FEMA to provide
actuarially-priced, optional residential basement coverage for
flood losses. Actuarially-priced business interruption coverage
for flood losses is also to be provided by FEMA for commercial
properties. This section also requires FEMA to provide
actuarially-priced contents coverage for both residential and
commercial properties.
Section 9. Increase in annual limitation on premium increases
This section amends section 1308(e) of the National Flood
Insurance Act of 1968 (42 U.S.C. 4015(e)) by increasing the
annual limitation on premium increases from 10 percent to 15
percent.
Section 10. Increase in borrowing authority
This section amends subsection (a) of section 1309 of the
National Flood Insurance Act of 1968 (42 U.S.C. 4016(a)), as
amended by the National Flood Insurance Program Enhanced
Borrowing Authority Act of 2005 (P.L. 109-65; 119 Stat. 1998),
by increasing the national flood insurance program's borrowing
authority to $25 billion. This section also requires that FEMA
submit a report to Congress, not later than 6 months after
enactment of this legislation, on how it intends to repay funds
borrowed under this increased authority.
Section 11. FEMA participation in state disaster claims mediation
programs
This section requires FEMA, upon request of a state
insurance commissioner, to participate in a state disaster
claims mediation program for the non-binding mediation of flood
insurance claims.
Section 12. FEMA reports on financial status of insurance program
This section amends section 1320 of the National Flood
Insurance Act of 1968 (42 U.S.C. 4027) by requiring a
semiannual report to Congress on the financial status of the
national flood insurance program.
Section 13. Extension of pilot program for mitigation of severe
repetitive loss properties
This section amends section 1361A of the National Flood
Insurance Act of 1968 (42 U.S.C. 4102a) by extending the
current pilot program, which is set to expire September 30,
2009, into 2011.
Section 14. Notice of availability of flood insurance and escrow in
RESPA good faith estimate
This section amends subsection (c) of section 5 of the Real
Estate Settlement Procedures Act of 1974 (12 U.S.C. 2604) by
requiring that each good faith estimate include a conspicuous
statement that flood insurance coverage for residential real
estate is generally available under the national flood
insurance program whether or not the real estate is located in
an area having special flood hazards and that, to obtain such
coverage, a home owner or purchaser should contact a hazard
insurance provider. Also, the estimate should note that
escrowing of flood insurance payments is required for many
loans under the Flood Disaster Protection Act of 1973, but may
be convenient and available for other loans as well.
Section 15. Reiteration of FEMA responsibilities under 2004 Reform Act
This section reiterates FEMA's responsibility to implement
provisions of the Bunning-Bereuter-Blumenauer Flood Insurance
Reform Act of 2004 (P.L. 108-264) and directs FEMA to continue
to work with the insurance industry, state insurance
regulators, and other interested parties to implement the
minimum training and education standards for all insurance
agents who sell flood insurance policies that FEMA established
under the notice published September 1, 2005 (70 Fed. Reg.
52117) pursuant to section 207 of the Bunning-Bereuter-
Blumenauer Flood Insurance Reform Act of 2004 (42 U.S.C. 4011).
This section also mandates that FEMA submit a report to
Congress on implementation of each provision of P.L. 108-264 no
later than 6 months after the enactment of this Act.
Section 16. Updating of flood maps and elevation standards
This section directs the FEMA Director to establish a
program within FEMA to review, update, and maintain national
flood insurance program rate maps. This section also requires
the FEMA Director to submit an annual report to Congress
detailing the updating and modernization of the floodplain
elevation maps. The first such report must be submitted to
Congress by June 30, 2006 and each subsequent annual report
must be submitted to Congress by June 30 of each year. This
section also directs FEMA to give priority to the updating of
flood maps and elevations for areas affected by Hurricane
Katrina or Hurricane Rita. $300,000,000 is authorized for
mapping for each of fiscal years 2007 through 2012. A technical
mapping advisory council is reestablished at FEMA in order to
make recommendations to the Director on mapping issues. This
section also directs the Director to facilitate expedited
community adoption of updated advisory flood level elevations
after a flood disaster.
Section 17. National levee inventory
This section directs the FEMA Director to maintain and
periodically publish an inventory of levees located in the
U.S., so that these levees can be identified for national flood
insurance program purposes.
Section 18. Clarification of replacement cost provisions, forms, and
policy language
This section directs FEMA, within 3 months of enactment, to
issue regulations and revise materials that it makes available
through the NFIP to clarify the applicability of replacement
cost coverage under the national flood insurance program. This
section also requires FEMA, within 3 months of enactment, to
revise standard flood insurance policy materials so that rating
and coverage descriptions are consistent with language used in
other homeowners and property and casualty insurance policies.
Section 19. Authorization of additional FEMA staff
This section authorizes necessary funds be appropriated for
the Director of FEMA to employ additional staff necessary to
carry out all of the responsibilities of the Director under
this Act.
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
* * * * * * *
NATURE AND LIMITATION OF INSURANCE COVERAGE
Sec. 1306. (a) * * *
(b) In addition to any other terms and conditions under
subsection (a), such regulations shall provide that--
(1) * * *
(2) in the case of any residential property for which
the risk premium rate is determined in accordance with
the provisions of section 1307(a)(1), additional flood
insurance in excess of the limits specified in clause
(i) of subparagraph (A) of paragraph (1) shall be made
available to every insured upon renewal and every
applicant of insurance so as to enable such insured or
applicant to receive coverage up to a total amount
(including such limits specified in paragraph
(1)(A)(i)) of [$250,000] $335,000;
(3) in the case of any residential property for which
the risk premium rate is determined in accordance with
the provisions of section 1307(a)(1), additional flood
insurance in excess of the limits specified in clause
(ii) of subparagraph (A) of paragraph (1) shall be made
available to every insured upon renewal and every
applicant for insurance so as to enable any such
insured or applicant to receive coverage up to a total
amount (including such limits specified in paragraph
(1)(A)(ii)) of [$100,000] $135,000;
(4) in the case of any nonresidential property,
including churches, for which the risk premium rate is
determined in accordance with the provisions of section
1307(a)(1), additional flood insurance in excess of the
limits specified in subparagraphs (B) and (C) of
paragraph (1) shall be made available to every insured
upon renewal and every applicant for insurance, in
respect to any single structure, up to a total amount
(including such limit specified in subparagraph (B) or
(C) of paragraph (1), as applicable) of [$500,000]
$670,000 for each structure and [$500,000] $670,000 for
any contents related to each structure; [and]
(5) any flood insurance coverage pursuant to
paragraph (2), (3), or (4) which may be made available
in excess of the limits specified in subparagraph (A),
(B), or (C) of paragraph (1), shall be based only on
chargeable premium rates under section 1308 which are
not less than the estimated premium rates under section
1307(a)(1), and the amount of such excess coverage
shall not in any case exceed an amount equal to the
applicable limit so specified (or allocated) under
paragraph (1)(C), (2), (3), or (4), as applicable[.];
(6) in the case of any residential property, each
renewal or new contract for flood insurance coverage
shall provide not less than $1,000 aggregate liability
per dwelling unit for any necessary increases in living
expenses incurred by the insured when losses from a
flood make the residence unfit to live in, which
coverage shall be available only at chargeable rates
that are not less than the estimated premium rates for
such coverage determined in accordance with section
1307(a)(1);
(7) in the case of any residential property, optional
coverage for additional living expenses described in
paragraph (6) shall be made available to every insured
upon renewal and every applicant in excess of the
limits provided in paragraph (6) in such amounts and at
such rates as the Director shall establish, except that
such chargeable rates shall not be less than the
estimated premium rates for such coverage determined in
accordance with section 1307(a)(1);
(8) in the case of any residential property, optional
coverage for losses, resulting from floods, to
improvements and personal property located in
basements, crawl spaces, and other enclosed areas under
buildings that are not covered by primary flood
insurance coverage under this title, shall be made
available to every insured upon renewal and every
applicant, except that such coverage shall be made
available only at chargeable rates that are not less
than the estimated premium rates for such coverage
determined in accordance with section 1307(a)(1);
(9) in the case of any commercial property, optional
coverage for losses resulting from any partial or total
interruption of the insured's business caused by damage
to, or loss of, such property from a flood shall be
made available to every insured upon renewal and every
applicant, except that--
(A) for purposes of such coverage, losses
shall be determined based on the profits the
covered business would have earned, based on
previous financial records, had the flood not
occurred; and
(B) such coverage shall be made available
only at chargeable rates that are not less than
the estimated premium rates for such coverage
determined in accordance with section
1307(a)(1); and
(10) in the case of any residential property and any
commercial property, optional coverage for the full
replacement costs of any contents related to the
structure that exceed the limits of coverage otherwise
provided in this subsection shall be made available to
every insured upon renewal and every applicant, except
that such coverage shall be made available only at
chargeable rates that are not less than the estimated
premium rates for such coverage determined in
accordance with section 1307(a)(1).
* * * * * * *
ESTABLISHMENT OF CHARGEABLE PREMIUM RATES
Sec. 1308. (a) * * *
* * * * * * *
(c) Actuarial Rate Properties.--[Subject only to the
limitations provided under paragraphs (1) and (2), the] 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) Nonresidential properties.--Any nonresidential
property.
(3) Non-primary residences.--Any residential property
that is not the primary residence of an individual.
[(2)] (4) 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.--Except with
respect to properties described under [paragraph (2) or (3)]
paragraph (4) 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] 15 percent of the average of the
risk premium rates for properties within the risk
classification upon the commencement of such 12-month period.
* * * * * * *
Sec. 1314. FEMA participation in State disaster claims
mediation programs.
(a) Requirement to Participate.--In the case of the
occurrence of a natural catastrophe that may result in flood
damage claims under the national flood insurance program, upon
a request made by the insurance commissioner of a State (or
such other official responsible for regulating the business of
insurance in the State) for the participation of
representatives of the Director in a program sponsored by such
State for nonbinding mediation of insurance claims resulting
from a natural catastrophe, the Director shall cause
appropriate representatives of national flood insurance program
to participate in such State program to expedite settlement of
any flood damage claims under the national flood insurance
program resulting from such catastrophe.
(b) Extent of Participation.--Participation by
representatives of the Director required under subsection (a)
with respect to flood damage claims resulting from a natural
catastrophe shall include--
(1) providing adjusters certified for purposes of the
national flood insurance program who are authorized to
settle claims against such program resulting from such
catastrophe in amounts up to the limits of policies
under such program;
(2) requiring such adjusters to attend State-
sponsored mediation meetings regarding flood insurance
claims resulting from such catastrophe at times and
places as may be arranged by the State;
(3) participating in good-faith negotiations toward
the settlement of such claims with policyholders of
coverage made available under the national flood
insurance program; and
(4) finalizing the settlement of such claims on
behalf of the national flood insurance program with
such policyholders.
(c) Coordination.--Adjusters representing the national flood
insurance program who participate pursuant to subsection (b)(1)
in a State-sponsored mediation program with respect to a
natural catastrophe shall at all times coordinate their
activities with insurance officials of the State and
representatives of insurers for the purpose of consolidating
and expediting the settlement of claims under the national
flood insurance program resulting from such catastrophe at the
earliest possible time.
* * * * * * *
[REPORT TO THE PRESIDENT] REPORTS
Sec. 1320. (a) [In General] Biennial Report to President.--The
Director shall biennially submit a report of operations under
this title to the President for submission to the Congress.
* * * * * * *
(c) Semiannual Reports to Congress on Financial Status.--Not
later than June 30 and December 31 of each year, the Director
shall submit a report to the Congress regarding the financial
status of the national flood insurance program under this
title. Each such report shall describe the financial status of
the National Flood Insurance Fund and current and projected
levels of claims, premium receipts, expenses, and borrowing
under the program.
* * * * * * *
CHAPTER III--COORDINATION OF FLOOD INSURANCE WITH LAND-MANAGEMENT
PROGRAMS IN FLOOD-PRONE AREAS
* * * * * * *
IDENTIFICATION OF FLOOD-PRONE AREAS
Sec. 1360. (a) * * *
* * * * * * *
(k) Program to Review, Update, and Maintain Flood Insurance
Program Maps.--
(1) In general.--The Director, in coordination with
the Technical Mapping Advisory Council established
pursuant to section 576 of the National Flood Insurance
Reform Act of 1994 (42 U.S.C. 4101 note) and section
16(c) of the Flood Insurance Reform and Modernization
Act of 2006, shall establish a program under which the
Director shall review, update, and maintain national
flood insurance program rate maps in accordance with
this subsection.
(2) Inclusions.--
(A) Covered areas.--Each map updated under
this subsection shall include a depiction of--
(i) the 500-year floodplain;
(ii) areas that could be inundated as
a result of the failure of a levee, as
determined by the Director; and
(iii) areas that could be inundated
as a result of the failure of a dam, as
identified under the National Dam
Safety Program Act (33 U.S.C. 467 et
seq.).
(B) Other inclusions.--In updating maps under
this subsection, the Director may include--
(i) any relevant information on
coastal inundation from--
(I) an applicable inundation
map of the Corps of Engineers;
and
(II) data of the National
Oceanic and Atmospheric
Administration relating to
storm surge modeling;
(ii) any relevant information of the
Geographical Service on stream flows,
watershed characteristics, and
topography that is useful in the
identification of flood hazard areas,
as determined by the Director; and
(iii) a description of any hazard
that might impact flooding, including,
as determined by the Director--
(I) land subsidence and
coastal erosion areas;
(II) sediment flow areas;
(III) mud flow areas;
(IV) ice jam areas; and
(V) areas on coasts and
inland that are subject to the
failure of structural
protective works, such as
levees, dams, and floodwalls.
(3) Standards.--In updating and maintaining maps
under this subsection, the Director shall establish
standards to--
(A) ensure that maps are adequate for--
(i) flood risk determinations; and
(ii) use by State and local
governments in managing development to
reduce the risk of flooding; and
(B) facilitate the Director, in conjunction
with State and local governments, to identify
and use consistent methods of data collection
and analysis in developing maps for communities
with similar flood risks, as determined by the
Director.
(4) Hurricanes Katrina and Rita mapping priority.--In
updating and maintaining maps under this subsection,
the Director shall--
(A) give priority to the updating and
maintenance of maps of coastal areas affected
by Hurricane Katrina or Hurricane Rita to
provide guidance with respect to hurricane
recovery efforts; and
(B) use the process of updating and
maintaining maps under subparagraph (A) as a
model for updating and maintaining other maps.
(5) Annual report.--Not later than June 30 of each
year, the Director shall submit a report to the
Congress describing, for the preceding 12-month period,
the activities of the Director under the program under
this section and the reviews and updates of flood
insurance program rate maps conducted under the
program. Each such annual report shall contain the most
recent report of the Technical Mapping Advisory Council
pursuant to section 576(c)(3) of the National Flood
Insurance Reform Act of 1994 (42 U.S.C. 4101 note).
(6) Authorization of appropriations.--There is
authorized to be appropriated to the Director to carry
out this subsection $300,000,000 for each of fiscal
years 2007 through 2012.-
SEC. 1361A. PILOT PROGRAM FOR MITIGATION OF SEVERE REPETITIVE LOSS
PROPERTIES.
(a) * * *
* * * * * * *
(k) Funding.--
(1) In general.--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 2005, 2006, 2007, 2008, [and
2009] 2009, 2010, and 2011, 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.
* * * * * * *
(l) Termination.--The Director may not provide assistance
under this section to any State or community after [September
30, 2009] September 30, 2011.
APPEALS
Sec. 1363. (a) * * *
* * * * * * *
(h) Expedited Community Adoption of Post-Disaster Advisory
Flood Elevations.--If the Director determines that it is
appropriate to examine flood elevation determinations after
flood-related disasters, to incorporate data gathered since the
publication of an effective flood insurance rate map or other
flood hazard map and to issue advisory flood elevations, the
Director shall expedite the notification and publication
procedures in this section. The Director shall require
community adoption of the advisory flood elevation information
under such expedited procedures for the purposes of local land
use and control measures and for the purposes of facilitating
flood-resistant reconstruction when Federal funds are made
available. Expediting the notification and publication
procedures shall be accomplished to preserve all rights to
submit information and to appeal the Director's findings.
* * * * * * *
----------
FLOOD DISASTER PROTECTION ACT OF 1973
* * * * * * *
TITLE I--EXPANSION OF NATIONAL FLOOD INSURANCE PROGRAM
* * * * * * *
FLOOD INSURANCE PURCHASE AND COMPLIANCE REQUIREMENTS AND ESCROW
ACCOUNTS
Sec. 102. (a) * * *
* * * * * * *
(f) Civil Monetary Penalties for Failure To Require Flood
Insurance or Notify.--
(1) * * *
* * * * * * *
(5) Amount.--A civil monetary penalty under this
subsection may not exceed [$350] $2,000 for each
violation under paragraph (2) or paragraph (3). The
total amount of penalties assessed under this
subsection against any single regulated lending
institution or enterprise during any calendar year may
not exceed [$100,000] $1,000,000.
(6) Lender compliance.--Notwithstanding any State or
local law, for purposes of this subsection, any
regulated lending institution that purchases flood
insurance or renews a contract for flood insurance on
behalf of or as an agent of a borrower of a loan for
which flood insurance is required shall be considered
to have complied with the regulations issued under
subsection (b). No penalty may be imposed under this
subsection on a regulated lending institution or
enterprise that has made a good faith effort to comply
with the requirements of the provisions referred to in
paragraph (2) or for any non-material violation of such
requirements.
* * * * * * *
----------
REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974
* * * * * * *
SPECIAL INFORMATION BOOKLETS
Sec. 5. (a) * * *
* * * * * * *
(c) Each lender shall include with the booklet a good faith
estimate of the amount or range of charges for specific
settlement services the borrower is likely to incur in
connection with the settlement as prescribed by the Secretary.
Such booklets shall take into consideration differences in real
estate settlement procedures which may exist among the several
States and territories of the United States and among separate
political subdivisions within the same State and territory.
Each such good faith estimate shall include the following
conspicuous statements: (1) that flood insurance coverage for
residential real estate is generally available under the
National Flood Insurance Program whether or not the real estate
is located in an area having special flood hazards and that, to
obtain such coverage, a home owner or purchaser should contact
a property insurance agent, broker, or company; and (2) that
the escrowing of flood insurance payments is required for many
loans under section 102(d) of the Flood Disaster Protection Act
of 1973, and may be a convenient and available option with
respect to other loans.
* * * * * * *
----------
NATIONAL FLOOD INSURANCE REFORM ACT OF 1994
* * * * * * *
TITLE V--NATIONAL FLOOD INSURANCE REFORM
* * * * * * *
Subtitle F--Miscellaneous Provisions
* * * * * * *
SEC. 576. TECHNICAL MAPPING ADVISORY COUNCIL.
(a) * * *
(b) Membership.--
(1) In general.--The Council shall consist of the
Director of the Federal Emergency Management Agency (in
this section referred to as the ``Director''), or the
Director's designee, and 10 additional members to be
appointed by the Director or the designee of the
Director, who shall be--
(A) * * *
* * * * * * *
(E) a representative of the Corps of
Engineers of the United States Army;
[(E)] (F) a representative of the United
States Geologic Survey;
[(F)] (G) a representative of State geologic
survey programs;
[(G)] (H) a representative of State national
flood insurance coordination offices;
(I) a representative of local or regional
flood and stormwater agencies;
(J) a representative of State geographic
information coordinators;
[(H)] (K) a representative of a regulated
lending institution;
(L) a representative of flood insurance
servicing companies;
[(I)] (M) a representative of the Federal
Home Loan Mortgage Corporation; and
[(J)] (N) a representative of the Federal
National Mortgage Association.
* * * * * * *
[(c) Duties.--The Council shall--
[(1) make recommendations to the Director on how to
improve in a cost-effective manner the accuracy,
general quality, ease of use, and distribution and
dissemination of flood insurance rate maps;
[(2) recommend to the Director mapping standards and
guidelines for flood insurance rate maps; and
[(3) submit an annual report to the Director that
contains--
[(A) a description of the activities of the
Council;
[(B) an evaluation of the status and
performance of flood insurance rate maps and
mapping activities to revise and update flood
insurance rate maps, as established pursuant to
the amendment made by section 675 ; and
[(C) a summary of recommendations made by the
Council to the Director.]
(c) Duties.--The Council shall--
(1) make recommendations to the Director for
improvements to the flood map modernization program
under section 1360(k) of the National Flood Insurance
Act of 1968 (42 U.S.C. 41010(k));
(2) make recommendations to the Director for
maintaining a modernized inventory of flood hazard maps
and information; and
(3) submit an annual report to the Director that
contains a description of the activities and
recommendations of the Council.
* * * * * * *
(k) Termination.--The Council shall terminate 5 years after
the date on which all members of the Council have been
appointed [under subsection (b)(1)] pursuant to subsection
(b)(1) of this section and section 16(c)(3) of the Flood
Insurance Reform and Modernization Act of 2006.
* * * * * * *
ADDITIONAL VIEWS
Flood Insurance Report Language
During deliberation of the underlying bill, I offered and
withdrew an amendment that would, after date of enactment of
the bill, require any purchaser of a pre-firm primary
residential house to pay phased-in actuarial flood insurance
prices using the same phase-in structure that non-residential
and non-primary homes are subject to in the legislation.
It is my hope that this language will be incorporated into
the final version of the bill. I feel this change will provide
additional resources to the flood insurance program in a fair
way and not subject current home owners of pre-firm houses to
unanticipated or unplanned for increases in the flood insurance
premiums.
Chairman Oxley, Ranking Member Frank and Congressman Baker
all spoke favorably of the amendment and indicated that they
would work with me on finding an appropriate way to include the
language into the legislation moving forward.
Scott Garrett.
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