[108th Congress Public Law 264]
[From the U.S. Government Printing Office]


[DOCID: f:publ264.108]

[[Page 711]]

     BUNNING-BEREUTER-BLUMENAUER FLOOD INSURANCE REFORM ACT OF 2004

[[Page 118 STAT. 712]]

Public Law 108-264
108th Congress

                                 An Act


 
 To amend the National Flood Insurance Act of 1968 to reduce losses to 
properties for which repetitive flood insurance claim payments have been 
               made. <<NOTE: June 30, 2004 -  [S. 2238]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Bunning-
Bereuter-Blumenauer Flood Insurance Reform Act of 2004. 42 USC 4001 
note.>> 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Bunning-Bereuter-
Blumenauer Flood Insurance Reform Act of 2004''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Congressional findings.

           TITLE I--AMENDMENTS TO FLOOD INSURANCE ACT OF 1968

Sec. 101. Extension of program and consolidation of authorizations.
Sec. 102. Establishment of pilot program for mitigation of severe 
           repetitive loss properties.
Sec. 103. Amendments to existing flood mitigation assistance program.
Sec. 104. FEMA authority to fund mitigation activities for individual 
           repetitive claims properties.
Sec. 105. Amendments to additional coverage for compliance with land use 
           and control measures.
Sec. 106. Actuarial rate properties.
Sec. 107. Geospatial digital flood hazard data.
Sec. 108. Replacement of mobile homes on original sites.
Sec. 109. Reiteration of FEMA responsibility to map mudslides.

                   TITLE II--MISCELLANEOUS PROVISIONS

Sec. 201. Definitions.
Sec. 202. Supplemental forms.
Sec. 203. Acknowledgement form.
Sec. 204. Flood insurance claims handbook.
Sec. 205. Appeal of decisions relating to flood insurance coverage.
Sec. 206. Study and report on use of cost compliance coverage.
Sec. 207. Minimum training and education requirements.
Sec. 208. GAO study and report.
Sec. 209. Prospective payment of flood insurance premiums.
Sec. 210. Report on changes to fee schedule or fee payment arrangements.

SEC. 2. CONGRESSIONAL FINDINGS. <<NOTE: 42 USC 4011 note.>> 

    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

[[Page 118 STAT. 713]]

                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, 2 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 2 or 3 losses that cumulatively exceed 
        building value or 4 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 1 
        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;
            (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; and
            (12) focusing the mitigation and buy-out of repetitive loss 
        properties upon communities and property owners that choose to 
        voluntarily participate in a mitigation and buy-out program will 
        maximize the benefits of such a program, while minimizing any 
        adverse impact on communities and property owners.

[[Page 118 STAT. 714]]

           TITLE I--AMENDMENTS TO FLOOD INSURANCE ACT OF 1968

SEC. 101. EXTENSION OF PROGRAM AND CONSOLIDATION OF 
                        AUTHORIZATIONS.

    (a) Borrowing Authority.--The first sentence of section 1309(a) of 
the National Flood Insurance Act of 1968 (42 U.S.C. 4016(a)), is amended 
by striking ``through December'' and all that follows through ``, and'' 
and inserting ``through the date specified in section 1319, and''.
    (b) Authority for Contracts.--Section 1319 of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4026), is amended by striking ``after'' 
and all that follows and inserting ``after September 30, 2008.''.
    (c) Emergency Implementation.--Section 1336(a) of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4056(a)), is amended 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''.
    (d) Authorization of Appropriations for Studies.--Section 1376(c) of 
the National Flood Insurance Act of 1968 (42 U.S.C. 4127(c)), is amended 
by striking ``through'' and all that follows and inserting ``through the 
date specified in section 1319, for studies under this title.''.
SEC. 102. 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:

``SEC. 1361A. <<NOTE: 42 USC 4102a.>> PILOT PROGRAM FOR MITIGATION OF 
            SEVERE REPETITIVE LOSS PROPERTIES.

    ``(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 that 
decide to participate in the pilot program established under this 
section 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 1 to 4 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 4 or more separate claims 
                      payments have been made under flood insurance 
                      coverage under this title, with the amount of each 
                      such claim exceeding $5,000, and with the 
                      cumulative amount of such claims payments 
                      exceeding $20,000; or

[[Page 118 STAT. 715]]

                          ``(ii) for which at least 2 separate claims 
                      payments have been made under such coverage, with 
                      the cumulative amount of such claims exceeding the 
                      value of the property.
            ``(2) <<NOTE: Regulations.>> Multifamily properties.--In the 
        case of a property consisting of 5 or more residences, such term 
        shall have such meaning as the Director shall by regulation 
        provide.

    ``(c) Eligible Activities.--Amounts provided under this section to a 
State or community may be used only for the following activities:
            ``(1) Mitigation activities.--To carry out mitigation 
        activities that reduce flood damages to severe repetitive loss 
        properties, including elevation, relocation, demolition, and 
        floodproofing of structures, and minor physical localized flood 
        control projects, and the demolition and rebuilding of 
        properties to at least Base Flood Elevation or greater, if 
        required by any local ordinance.
            ``(2) Purchase.--To purchase severe repetitive loss 
        properties, subject to subsection (g).

    ``(d) Matching Requirement.--
            ``(1) In general.--Except as provided in paragraph (2), in 
        any fiscal year 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) Reduced community match.--With respect to any 1-year 
        period in which assistance is made available under this section, 
        the Director may adjust the contribution required under 
        paragraph (1) by any State, and for the communities located in 
        that State, to not less than 10 percent of the cost of the 
        activities for each severe repetitive loss property for which 
        grant amounts are provided if, for such year--
                    ``(A) the State has an approved State mitigation 
                plan meeting the requirements for hazard mitigation 
                planning under section 322 of the Robert T. Stafford 
                Disaster Relief and Emergency Assistance Act (42 U.S.C. 
                5165) that specifies how the State intends to reduce the 
                number of severe repetitive loss properties; and
                    ``(B) the Director determines, after consultation 
                with the State, that the State has taken actions to 
                reduce the number of such properties.
            ``(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) Notice of Mitigation Program.--
            ``(1) In general.--Upon selecting a State or community to 
        receive assistance under subsection (a) to carry out eligible 
        activities, the Director shall notify the owners of a severe

[[Page 118 STAT. 716]]

        repetitive loss property, in plain language, within that State 
        or community--
                    ``(A) that their property meets the definition of a 
                severe repetitive loss property under this section;
                    ``(B) that they may receive an offer of assistance 
                under this section;
                    ``(C) of the types of assistance potentially 
                available under this section;
                    ``(D) of the implications of declining such offer of 
                assistance under this section; and
                    ``(E) that there is a right to appeal under this 
                section.
            ``(2) Identification of severe repetitive loss properties.--
        The Director shall take such steps as are necessary to identify 
        severe repetitive loss properties, and submit that information 
        to the relevant States and communities.

    ``(f) 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, in 
        a manner consistent with the allocation formula under paragraph 
        (5).
            ``(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 practicable.
            ``(3) Consultation.--In determining for which eligible 
        activities under subsection (c) to provide assistance with 
        respect to a severe repetitive loss property, the relevant 
        States and communities shall consult, to the extent practicable, 
        with the owner of the property.
            ``(4) Deference to local mitigation decisions.--The Director 
        shall not, by rule, regulation, or order, establish a priority 
        for funding eligible activities under this section that gives 
        preference to one type or category of eligible activity over any 
        other type or category of eligible activity.
            ``(5) Allocation.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), of the total amount made available for assistance 
                under this section in any fiscal year, the Director 
                shall allocate assistance to a State, and the 
                communities located within that State, based upon the 
                percentage of the total number of severe repetitive loss 
                properties located within that State.
                    ``(B) Redistribution.--Any funds allocated to a 
                State, and the communities within the State, under 
                subparagraph (A) that have not been obligated by the end 
                of each fiscal year shall be redistributed by the 
                Director to other States and communities to carry out 
                eligible activities in accordance with this section.
                    ``(C) Exception.--Of the total amount made available 
                for assistance under this section in any fiscal year, 10 
                percent shall be made available to communities that--

[[Page 118 STAT. 717]]

                          ``(i) contain one or more severe repetitive 
                      loss properties; and
                          ``(ii) are located in States that receive 
                      little or no assistance, as determined by the 
                      Director, under the allocation formula under 
                      subparagraph (A).
            ``(6) 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.

    ``(g) 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 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) Offers.--The Director shall provide assistance in a 
        manner that permits States and communities to make offers to 
        owners of severe repetitive loss properties and of associated 
        land to engage in eligible activities as soon as possible.
            ``(3) 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, or an amount equal to the 
                current fair market value of the property.
            ``(4) Comparable housing payment.--If a purchase offer made 
        under paragraph (2) is less than the cost of the homeowner-
        occupant to purchase a comparable replacement dwelling outside 
        the flood hazard area in the same community, the Director shall 
        make available an additional relocation payment to the 
        homeowner-occupant to apply to the difference.

    ``(h) Increased Premiums in Cases of Refusal To Mitigate.--
            ``(1) In general.--In any case in which the owner of a 
        severe repetitive loss property refuses an offer to take action 
        under paragraph (1) or (2) of subsection (c) with respect to 
        such property, the Director shall--
                    ``(A) <<NOTE: Notification.>> notify each holder of 
                a recorded interest on the property of such refusal; and
                    ``(B) notwithstanding subsections (a) through (c) of 
                section 1308, thereafter the chargeable premium rate 
                with respect to the property shall be the amount equal 
                to 150 percent of the chargeable rate for the property 
                at the time that the offer was made, as adjusted by any 
                other premium adjustments otherwise applicable to the 
                property

[[Page 118 STAT. 718]]

                and any subsequent increases pursuant to paragraph (2) 
                and subject to the limitation under paragraph (3).
            ``(2) Increased premiums upon subsequent flood damage.--
        Notwithstanding subsections (a) through (c) of section 1308, if 
        the owner of a severe repetitive loss property does not accept 
        an offer to take action under paragraph (1) or (2) of subsection 
        (c) with respect to such property and a claim payment exceeding 
        $1,500 is made under flood insurance coverage under this title 
        for damage to the property caused by a flood event occurring 
        after such offer is made, thereafter the chargeable premium rate 
        with respect to the property shall be the amount equal to 150 
        percent of the chargeable rate for the property at the time of 
        such flood event, as adjusted by any other premium adjustments 
        otherwise applicable to the property and any subsequent 
        increases pursuant to this paragraph and subject to the 
        limitation under paragraph (3).
            ``(3) Limitation on increased premiums.--In no case may the 
        chargeable premium rate for a severe repetitive loss property be 
        increased pursuant to this subsection to an amount exceeding the 
        applicable estimated risk premium rate for the area (or 
        subdivision thereof) under section 1307(a)(1).
            ``(4) Treatment of deductibles.--Any increase in chargeable 
        premium rates required under this subsection for a severe 
        repetitive loss property may be carried out, to the extent 
        appropriate, as determined by the Director, by adjusting any 
        deductible charged in connection with flood insurance coverage 
        under this title for the property.
            ``(5) Notice of continued offer.--Upon each renewal or 
        modification of any flood insurance coverage under this title 
        for a severe repetitive loss property, the Director shall notify 
        the owner that the offer made pursuant to subsection (c) is 
        still open.
            ``(6) Appeals.--
                    ``(A) In general.--Any owner of a severe repetitive 
                loss property may appeal a determination of the Director 
                to take action under paragraph (1)(B) or (2) with 
                respect to such property, based only upon the following 
                grounds:
                          ``(i) As a result of such action, the owner of 
                      the property will not be able to purchase a 
                      replacement primary residence of comparable value 
                      and that is functionally equivalent.
                          ``(ii) Based on independent information, such 
                      as contractor estimates or appraisals, the 
                      property owner believes that the price offered for 
                      purchasing the property is not an accurate 
                      estimation of the value of the property, or the 
                      amount of Federal funds offered for mitigation 
                      activities, when combined with funds from non-
                      Federal sources, will not cover the actual cost of 
                      mitigation.
                          ``(iii) 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.

[[Page 118 STAT. 719]]

                          ``(iv) 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.
                          ``(v) 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.
                          ``(vi) The owner of the property, based on 
                      independent information, such as contractor 
                      estimates or other appraisals, demonstrates that 
                      an alternative eligible activity under subsection 
                      (c) is at least as cost effective as the initial 
                      offer of assistance.
                    ``(B) <<NOTE: Deadlines.>> 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)(B) or (2), as 
                applicable.
                    ``(C) Effect of final determination.--In an appeal 
                under this paragraph--
                          ``(i) if a final determination is made in 
                      favor of the property owner under subparagraph (A) 
                      exist, the third party hearing such appeal shall 
                      require the Director 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)(B) or (2) to the 
                      amount paid prior to the offer to take action 
                      under paragraph (1) or (2) of subsection (c); 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)(B) or (2), as applicable, and shall collect 
                      from the property owner the amount necessary to 
                      cover the stay of the applicability of such 
                      increased rates during the pendency of the appeal.
                    ``(D) Costs.--If the third party hearing an appeal 
                under this paragraph is compensated for such service, 
                the costs of such compensation shall be borne--
                          ``(i) by the owner of the property requesting 
                      the appeal, if the final determination in the 
                      appeal is that the grounds under subparagraph (A) 
                      do not exist; and

[[Page 118 STAT. 720]]

                          ``(ii) by the National Flood Insurance Fund, 
                      if such final determination is that the grounds 
                      under subparagraph (A) do exist.
                    ``(E) <<NOTE: Deadline.>> Report.--Not later than 6 
                months after the date of the enactment of the Bunning-
                Bereuter-Blumenauer Flood Insurance Reform Act of 2004, 
                the Director shall submit a report describing the rules, 
                procedures, and administration for appeals under this 
                paragraph to--
                          ``(i) the Committee on Banking, Housing, and 
                      Urban Affairs of the Senate; and
                          ``(ii) the Committee on Financial Services of 
                      the House of Representatives.

    ``(i) 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.

    ``(j) Rules.--
            ``(1) In general.--The Director shall, by rule--
                    ``(A) subject to subsection (f)(4), develop 
                procedures for the distribution of funds to States and 
                communities to carry out eligible activities under this 
                section; and
                    ``(B) ensure that the procedures developed under 
                paragraph (1)--
                          ``(i) require the Director to notify States 
                      and communities of the availability of funding 
                      under this section, and that participation in the 
                      pilot program under this section is optional;
                          ``(ii) provide that the Director may assist 
                      States and communities in identifying severe 
                      repetitive loss properties within States or 
                      communities;
                          ``(iii) allow each State and community to 
                      select properties to be the subject of eligible 
                      activities, and the appropriate eligible activity 
                      to be performed with respect to each severe 
                      repetitive loss property; and
                          ``(iv) require each State or community to 
                      submit a list of severe repetitive loss properties 
                      to the Director that the State or community would 
                      like to be the subject of eligible activities 
                      under this section.
            ``(2) <<NOTE: Deadline.>> Consultation.--Not later than 90 
        days after the date of enactment of this Act, the Director shall 
        consult with State and local officials in carrying out paragraph 
        (1)(A), and provide an opportunity for an oral presentation, on 
        the record, of data and arguments from such officials.

    ``(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, except that the amount so used 
        in each such fiscal year may not exceed $40,000,000 and shall 
        remain available until expended. Notwithstanding

[[Page 118 STAT. 721]]

        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.
            ``(2) Administrative expenses.--Of the amounts made 
        available under this subsection, the Director may use up to 5 
        percent for expenses associated with the administration of this 
        section.

    ``(l) Termination.--The Director may not provide assistance under 
this section to any State or community after September 30, 2009.''.
    (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:
            ``(8) for financial assistance under section 1361A 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 1361A(i); and''.
SEC. 103. AMENDMENTS TO EXISTING FLOOD MITIGATION ASSISTANCE 
                        PROGRAM.

    (a) Standard for Approval of Mitigation Plans.--Section 1366(e)(3) 
of the National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is amended 
by adding at the end the following new sentence: ``The Director may 
approve only mitigation plans that give priority for funding to such 
properties, or to such subsets of properties, as are in the best 
interest of the National Flood Insurance Fund.''.
    (b) Priority for Mitigation Assistance.--Section 1366(e) of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is amended by 
striking paragraph (4) and inserting the following:
            ``(4) Priority for mitigation assistance.--In providing 
        grants under this subsection for mitigation activities, the 
        Director shall give first priority for funding to such 
        properties, or to such subsets of such properties as the 
        Director may establish, that the Director determines are in the 
        best interests of the National Flood Insurance Fund and for 
        which matching amounts under subsection (f) are available.''.

    (c) 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:
    ``(m) Coordination With States and Communities.--The Director shall, 
in consultation and coordination with States and communities take such 
actions as are appropriate to encourage and improve participation in the 
national flood insurance program of owners of properties, including 
owners of properties that are not located in areas having special flood 
hazards (the 100-year floodplain), but are located within flood prone 
areas.''.
    (d) Funding.--Section 1367 of the National Flood Insurance Act of 
1968 (42 U.S.C. 4104d) is amended--
            (1) in subsection (b), by striking paragraph (1) and 
        inserting the following:
            ``(1) in each fiscal year, amounts from the National Flood 
        Insurance Fund not exceeding $40,000,000, to remain available 
        until expended;'';

[[Page 118 STAT. 722]]

            (2) by redesignating subsections (c) and (d) as subsections 
        (d) and (e), respectively; and
            (3) by inserting after subsection (b) the following:

    ``(c) Administrative Expenses.--The Director may use not more than 5 
percent of amounts made available under subsection (b) to cover 
salaries, expenses, and other administrative costs incurred by the 
Director to make grants and provide assistance under sections 1366 and 
1323.''.
    (e) Reduced Community Match.--Section 1366(g) of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4104c(g)), is amended--
            (2) by redesignating paragraph (2) as paragraph (3); and
            (3) by inserting after paragraph (1) the following:
            ``(2) Reduced community match.--With respect to any 1-year 
        period in which assistance is made available under this section, 
        the Director may adjust the contribution required under 
        paragraph (1) by any State, and for the communities located in 
        that State, to not less than 10 percent of the cost of the 
        activities for each severe repetitive loss property for which 
        grant amounts are provided if, for such year--
                    ``(A) the State has an approved State mitigation 
                plan meeting the requirements for hazard mitigation 
                planning under section 322 of the Robert T. Stafford 
                Disaster Relief and Emergency Assistance Act (42 U.S.C. 
                5165) that specifies how the State intends to reduce the 
                number of severe repetitive loss properties; and
                    ``(B) the Director determines, after consultation 
                with the State, that the State has taken actions to 
                reduce the number of such properties.''.

    (f) National Flood Mitigation Fund.--Section 1366(b)(2) of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4104c(b)(2)), is amended 
by striking ``$1,500,000'' and inserting ``7.5 percent of the available 
funds under this section''.
SEC. 104. 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:

``SEC. 1323. <<NOTE: 42 USC 4030.>> GRANTS FOR REPETITIVE INSURANCE 
            CLAIMS PROPERTIES.

    ``(a) In General.--The Director may provide funding for mitigation 
actions that reduce flood damages to individual properties for which 1 
or more claim payments for losses have been made under flood insurance 
coverage under this title, 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 cannot 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 the 
properties for which funding is to be provided under this section,

[[Page 118 STAT. 723]]

the Director shall consult with the States in which such properties are 
located and 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.''.
    (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:
            ``(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. 105. AMENDMENTS TO ADDITIONAL COVERAGE FOR COMPLIANCE WITH 
                        LAND USE AND CONTROL MEASURES.

    (a) Compliance With Land Use and Control Measures.--Section 1304(b) 
of the National Flood Insurance Act of 1968 (42 U.S.C. 4011(b)) is 
amended--
            (1) in the matter preceding paragraph (1)--
                    (A) by striking ``compliance'' and inserting 
                ``implementing measures that are consistent''; and
                    (B) by inserting ``by the community'' after 
                ``established'';
            (2) in paragraph (2), by striking ``have flood damage in 
        which the cost of repairs equals or exceeds 50 percent of the 
        value of the structure at the time of the flood event; and'' and 
        inserting ``are substantially damaged structures;''
            (3) in paragraph (3), by striking ``compliance with land use 
        and control measures.'' and inserting ``the implementation of 
        such measures; and''; and
            (4) by inserting after paragraph (3) and before the last 
        undesignated paragraph the following:
            ``(4) properties for which an offer of mitigation assistance 
        is made under--
                    ``(A) section 1366 (Flood Mitigation Assistance 
                Program);
                    ``(B) section 1368 (Repetitive Loss Priority Program 
                and Individual Priority Property Program);
                    ``(C) the Hazard Mitigation Grant Program authorized 
                under section 404 of the Robert T. Stafford Disaster 
                Assistance and Emergency Relief Act (42 U.S.C. 5170c);
                    ``(D) the Predisaster Hazard Mitigation Program 
                under section 203 of the Robert T. Stafford Disaster 
                Assistance and Emergency Relief Act (42 U.S.C. 5133); 
                and
                    ``(E) any programs authorized or for which funds are 
                appropriated to address any unmet needs or for which 
                supplemental funds are made available.''.

    (b) Definitions.--Section 1370(a) of the National Flood Insurance 
Act of 1968 (42 U.S.C. 4121(a)) is amended--
            (1) by striking paragraph (7) and inserting the following:
            ``(7) the term `repetitive loss structure' means a structure 
        covered by a contract for flood insurance that--
                    ``(A) has incurred flood-related damage on 2 
                occasions, in which the cost of repair, on the average, 
                equaled or exceeded 25 percent of the value of the 
                structure at the time of each such flood event; and

[[Page 118 STAT. 724]]

                    ``(B) at the time of the second incidence of flood-
                related damage, the contract for flood insurance 
                contains increased cost of compliance coverage.'';
            (2) in paragraph (13), by striking ``and'' at the end;
            (3) in paragraph (14), by striking the period and inserting 
        ``; and''; and
            (4) by adding at the end the following:
            ``(15) the term `substantially damaged structure' means a 
        structure covered by a contract for flood insurance that has 
        incurred damage for which the cost of repair exceeds an amount 
        specified in any regulation promulgated by the Director, or by a 
        community ordinance, whichever is lower.''.

SEC. 106. 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:
    ``(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) 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. 107. GEOSPATIAL DIGITAL FLOOD HAZARD DATA. <<NOTE: 42 USC 4101 
            note.>> 

    For the purposes of flood insurance and floodplain management 
activities conducted pursuant to the National Flood Insurance Program 
under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.), 
geospatial digital flood hazard data distributed by the Federal 
Emergency Management Agency, or its designee, or the printed products 
derived from that data, are interchangeable and legally equivalent for 
the determination of the location of 1 in 100 year and 1 in 500 year 
flood planes, provided that all other geospatial data shown on the 
printed product meets or exceeds any accuracy standard promulgated by 
the Federal Emergency Management Agency.
SEC. 108. 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:

[[Page 118 STAT. 725]]

    ``(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) <<NOTE: Deadline.>> 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. 109. REITERATION <<NOTE: 42 USC 4101 note.>> 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.

TITLE <<NOTE: 42 USC 4011 note.>> II--MISCELLANEOUS PROVISIONS

SEC. 201. DEFINITIONS.

    In this title, the following definitions shall apply:
            (1) Director.--The term ``Director'' means the Director of 
        the Federal Emergency Management Agency.
            (2) Flood insurance policy.--The term ``flood insurance 
        policy'' means a flood insurance policy issued under the 
        National Flood Insurance Act of 1968 (42 U.S.C. et seq.).
            (3) Program.--The term ``Program'' means the National Flood 
        Insurance Program established under the National Flood Insurance 
        Act of 1968 (42 U.S.C. 4001 et seq.).

SEC. 202. SUPPLEMENTAL FORMS.

    (a) <<NOTE: Deadline.>> In General.--Not later than 6 months after 
the date of enactment of this Act, the Director shall develop 
supplemental forms to be issued in conjunction with the issuance of a 
flood insurance policy that set forth, in simple terms--
            (1) the exact coverages being purchased by a policyholder;
            (2) any exclusions from coverage that apply to the coverages 
        purchased;
            (3) an explanation, including illustrations, of how lost 
        items and damages will be valued under the policy at the time of 
        loss;

[[Page 118 STAT. 726]]

            (4) the number and dollar value of claims filed under a 
        flood insurance policy over the life of the property, and the 
        effect, under the National Flood Insurance Act of 1968 (42 
        U.S.C. 4001 et seq.), of the filing of any further claims under 
        a flood insurance policy with respect to that property; and
            (5) any other information that the Director determines will 
        be helpful to policyholders in understanding flood insurance 
        coverage.

    (b) Distribution.--The forms developed under subsection (a) shall be 
given to--
            (1) all holders of a flood insurance policy at the time of 
        purchase and renewal; and
            (2) insurance companies and agents that are authorized to 
        sell flood insurance policies.

SEC. 203. ACKNOWLEDGEMENT FORM.

    (a) <<NOTE: Deadline.>> In General.--Not later than 6 months after 
the date of enactment of this Act, the Director shall develop an 
acknowledgement form to be signed by the purchaser of a flood insurance 
policy that contains--
            (1) an acknowledgement that the purchaser has received a 
        copy of the standard flood insurance policy, and any forms 
        developed under section 202; and
            (2) an acknowledgement that the purchaser has been told that 
        the contents of a property or dwelling are not covered under the 
        terms of the standard flood insurance policy, and that the 
        policyholder has the option to purchase additional coverage for 
        such contents.

    (b) Distribution.--Copies of an acknowledgement form executed under 
subsection (a) shall be made available to the purchaser and the 
Director.

SEC. 204. FLOOD INSURANCE CLAIMS HANDBOOK.

    (a) <<NOTE: Deadline.>> In General.--Not later than 6 months after 
the date of enactment of this Act, the Director shall develop a flood 
insurance claims handbook that contains--
            (1) a description of the procedures to be followed to file a 
        claim under the Program, including how to pursue a claim to 
        completion;
            (2) how to file supplementary claims, proof of loss, and any 
        other information relating to the filing of claims under the 
        Program; and
            (3) detailed information regarding the appeals process 
        established under section 205.

    (b) Distribution.--The handbook developed under subsection (a) shall 
be made available to--
            (1) each insurance company and agent authorized to sell 
        flood insurance policies; and
            (2) each purchaser, at the time of purchase and renewal, of 
        a flood insurance policy, and at the time of any flood loss 
        sustained by such purchaser.
SEC. 205. APPEAL <<NOTE: Deadline. Regulations.>> OF DECISIONS 
                        RELATING TO FLOOD INSURANCE COVERAGE.

    Not later than 6 months after the date of enactment of this Act, the 
Director shall, by regulation, establish an appeals process through 
which holders of a flood insurance policy may appeal the

[[Page 118 STAT. 727]]

decisions, with respect to claims, proofs of loss, and loss estimates 
relating to such flood insurance policy, of--
            (1) any insurance agent or adjuster, or insurance company; 
        or
            (2) any employee or contractor of the Federal Emergency 
        Management Agency.
SEC. 206. STUDY <<NOTE: Deadline.>> AND REPORT ON USE OF COST 
                        COMPLIANCE COVERAGE.

    Not later than 1 year after the date of enactment of this Act, the 
Director of the Federal Emergency Management Agency shall submit to 
Congress a report that sets forth--
            (1) the use of cost of compliance coverage under section 
        1304(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 
        4011(b)) in connection with flood insurance policies;
            (2) any barriers to policyholders using the funds provided 
        by cost of compliance coverage under that section 1304(b) under 
        a flood insurance policy, and recommendations to address those 
        barriers; and
            (3) the steps that the Federal Emergency Management Agency 
        has taken to ensure that funds paid for cost of compliance 
        coverage under that section 1304(b) are being used to lessen the 
        burdens on all homeowners and the Program.

SEC. 207. MINIMUM TRAINING AND EDUCATION REQUIREMENTS.

    The Director of the Federal Emergency Management Agency shall, in 
cooperation with the insurance industry, State insurance regulators, and 
other interested parties--
            (1) establish minimum training and education requirements 
        for all insurance agents who sell flood insurance policies; and
            (2) <<NOTE: Deadline. Federal Register, publication.>> not 
        later than 6 months after the date of enactment of this Act, 
        publish these requirements in the Federal Register, and inform 
        insurance companies and agents of the requirements.

SEC. 208. GAO STUDY AND REPORT.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study of--
            (1) the adequacy of the scope of coverage provided under 
        flood insurance policies in meeting the intended goal of 
        Congress that flood victims be restored to their pre-flood 
        conditions, and any recommendations to ensure that goal is being 
        met;
            (2) the adequacy of payments to flood victims under flood 
        insurance policies; and
            (3) the practices of the Federal Emergency Management Agency 
        and insurance adjusters in estimating losses incurred during a 
        flood, and how such practices affect the adequacy of payments to 
        flood victims.

    (b) <<NOTE: Deadline.>> Report.--Not later than 1 year after the 
date of enactment of this Act, the Comptroller General shall submit to 
Congress a report regarding the results of the study under subsection 
(a).
SEC. 209. PROSPECTIVE PAYMENT OF FLOOD INSURANCE PREMIUMS.

    Section 1308 of the National Flood Insurance Act of 1968 (42 U.S.C. 
4015) is amended by adding at the end the following:
    ``(f) Adjustment of Premium.--Notwithstanding any other provision of 
law, if the Director determines that the holder of a flood insurance 
policy issued under this Act is paying a lower

[[Page 118 STAT. 728]]

premium than is required under this section due to an error in the flood 
plain determination, the Director may only prospectively charge the 
higher premium rate.''.
SEC. 210. REPORT <<NOTE: Deadline.>> ON CHANGES TO FEE SCHEDULE OR 
                        FEE PAYMENT ARRANGEMENTS.

    Not later than 3 months after the date of enactment of this Act, the 
Director shall submit a report on any changes or modifications made to 
the fee schedule or fee payment arrangements between the Federal 
Emergency Management Agency and insurance adjusters who provide services 
with respect to flood insurance policies to--
            (1) the Committee on Banking, Housing, and Urban Affairs of 
        the Senate; and
            (2) the Committee on Financial Services of the House of 
        Representatives.

    Approved June 30, 2004.

LEGISLATIVE HISTORY--S. 2238 (H.R. 253):
---------------------------------------------------------------------------

HOUSE REPORTS: No. 108-266 accompanying H.R. 253 (Comm. on Financial 
Services).
SENATE REPORTS: No. 108-262 (Comm. on Banking, Housing, and Urban 
Affairs).
CONGRESSIONAL RECORD, Vol. 150 (2004):
            June 15, considered and passed Senate.
            June 21, considered and passed House.

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