Section 1 Short title
This Act may be cited as the “National Flood Insurance Program Extension and Enhanced Consumer and Community Protections Act of 2018”.
National Flood Insurance Program Extension and Enhanced Consumer and Community Protections Act of 2018
A BILL
To extend the National Flood Insurance Program, and for other purposes.
Sec. 2 Extension of National Flood Insurance Program
Financing— Section 1309(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4016(a)) is amended by striking “September 30, 2017” and inserting “November 30, 2018”.
Program expiration— Section 1319 of the National Flood Insurance Act of 1968 (42 U.S.C. 4026) is amended by striking “September 30, 2017” and inserting “November 30, 2018”.
Sec. 3 Community accountability for repetitively flooded areas
In general— Section 1361 of the National Flood Insurance Act of 1968 (42 U.S.C. 4102) is amended by adding at the end the following new subsection:
“(e) Community accountability for repetitively damaged areas
“(1) In general—The Administrator shall, by regulation, require any covered community (as such term is defined in paragraph (5))—
“(A) to identify the areas within the community where properties described in paragraph (5)(B) or flood-damaged facilities are located to determine areas repeatedly damaged by floods and to assess, with assistance from the Administrator, the continuing risks to such areas;
“(B) to develop a community-specific plan for mitigating continuing flood risks to such repetitively flooded areas and to submit such plan and plan updates to the Administrator at appropriate intervals;
“(C) to implement such plans; and
“(D) to make such plan, plan updates, and reports on progress in reducing flood risk available to the public, subject to section 552a of title 5, United States Code.
“(2) Incorporation into existing plans—Plans developed pursuant to paragraph (1) may be incorporated into mitigation plans developed under section 1366 of this Act (42 U.S.C. 4104c) and hazard mitigation plans developed under section 322 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5165).
“(3) Assistance to communities
“(A) Data—To assist communities in preparation of plans required under paragraph (1), the Administrator shall, upon request, provide covered communities with appropriate data regarding the property addresses and dates of claims associated with insured properties within the community.
“(B) Mitigation grants—In making determinations regarding financial assistance under the authorities of this Act, the Administrator may consider the extent to which a community has complied with this subsection and is working to remedy problems with addressing repeatedly flooded areas.
“(4) Sanctions
“(A) In general—The Administrator shall, by regulations issued in accordance with the procedures established under section 553 of title 5, United States Code, regarding substantive rules, provide appropriate sanctions for covered communities that fail to comply with the requirements under this subsection or to make sufficient progress in reducing the flood risks to areas in the community that are repeatedly damaged by floods.
“(B) Notice—Before imposing any sanction pursuant to this paragraph, the Administrator shall provide the covered community involved with notice of the non-compliance that could result in the imposition of sanctions, which shall include recommendations for actions to bring the covered community into compliance.
“(C) Considerations—In determining appropriate sanctions to impose under this paragraph, the Administrator shall consider the resources available to the covered community involved, including Federal funding, the portion of the covered community that lies within an area having special flood hazards, and other factors that make it difficult for the covered community to conduct mitigation activities for existing flood-prone structures.
“(5) Covered community—For purposes of this subsection, the term “covered community” means a community—
“(A) that is participating, pursuant to section 1315, in the national flood insurance program; and
“(B) within which are located—
“(i) 50 or more repetitive loss structures for each of which, during any 10-year period, two or more claims for payments under flood insurance coverage have been made with a cumulative amount exceeding $1,000;
“(ii) 5 or more severe repetitive loss structures (as such term is defined in section 1366(h)) for which mitigation activities meeting the standards for approval under section 1366(c)(2)(A) have not been conducted; or
“(iii) a public facility or a private nonprofit facility (as such terms are as defined in section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122)), that has received assistance for repair, restoration, reconstruction, or replacement under section 406 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5172) in connection with more than one flooding event in the most recent 10-year period.
“(6) Repetitive-loss structure—For purposes of this subsection, the term “repetitive loss structure” has the meaning given such term in section 1370 (42 U.S.C. 4121).
“(7) Reports to congress—Not later than the expiration of the 6-year period beginning upon the date of the enactment of this subsection, and not less than every 2 years thereafter, the Administrator shall submit a report to the Congress regarding the progress in implementing plans developed pursuant to paragraph (1)(B).”
Regulations— The Administrator of the Federal Emergency Management Agency shall issue regulations necessary to carry out subsection (e) of section 1361 of the National Flood Insurance Act of 1968, as added by the amendment made by subsection (a) of this section, not later than the expiration of the 12-month period that begins on the date of the enactment of this Act.
Sec. 4 Increased cost of compliance
In general— Section 1304(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 4011(b)) is amended—
in paragraph (4), by redesignating subparagraphs (A) through (D) as clauses (i) through (iv), respectively, and adjusting the margins accordingly;
by redesignating paragraphs (1) through (4) as subparagraphs (A) through (D), respectively, and adjusting the margins accordingly;
in the matter preceding subparagraph (A), as so redesignated, by striking “The national” and inserting the following:
“(1) In general—The national”
in paragraph (1), as so designated—
in subparagraph (A), as so redesignated, by inserting “, without regard to whether the property is in an area having special flood hazards” after “loss structures”;
in subparagraph (C), as so redesignated, by striking the period at the end and inserting a semicolon;
in subparagraph (D), as so redesignated—
in the matter preceding clause (i), as so redesignated, by inserting “subject to paragraph (2),” before “properties for which”; and
in clause (iv), as so redesignated, by striking the period at the end and inserting “; and”; and
by adding at the end the following:
“(E) a property outside an area having special flood hazards if the community, under section 1361, has established land use and control measures for the area in which the property is located.”
by striking the flush text following paragraph (1)(E), as added by paragraph (4)(D) of this subsection, and inserting the following:
“(2) Use of funds for mitigation projects—The Administrator shall allow a policyholder to use insurance purchased under this subsection for any eligible project costs under a program described in clause (i), (ii), or (iii) of paragraph (1)(D) of an acquisition, demolition, elevation, relocation, or small structural project funded under that program, including—
“(A) asbestos remediation;
“(B) the demolition of a driveway or sidewalk when a structure is acquired; and
“(C) the addition of a lift, ramp, or other device that is necessary for a homeowner or occupant with a physical limitation or disability to safely access a home that has been elevated.
“(3) Surcharges
“(A) Primary coverage—The Administrator shall impose a surcharge on each insured of an amount per policy that the Administrator determines is appropriate in order to provide cost of compliance coverage in accordance with paragraph (4)(A).
“(B) Enhanced coverage—For each policy for flood insurance made available under this title with respect to which enhanced coverage is provided under paragraph (4)(B), the Administrator shall impose a surcharge, in addition to the surcharge imposed under subparagraph (A), in an amount that the Administrator determines appropriate.
“(4) Amount of coverage
“(A) Primary coverage—Each policy for flood insurance coverage made available under this title shall provide coverage under this subsection having an aggregate liability for any single property of $60,000.
“(B) Enhanced coverage—Notwithstanding the limitation under subparagraph (A), the Administrator shall provide, upon request by a policyholder, enhanced coverage under this subsection having an aggregate liability for any single property in an amount that is not more than $100,000.
“(5) Treatment of coverage limits—The purchase of insurance under this subsection with respect to a property shall not be counted for the purposes of any limitation on coverage with respect to that property under section 1306(b).”
Technical and conforming amendment— Not later than 1 year after the date of enactment of this Act, the Administrator of the Federal Emergency Management Agency shall amend the Standard Flood Insurance Policy set forth in appendix A to part 61 of title 44, Code of Federal Regulations, to conform the item relating to “Coverage D—Increased Cost of Compliance” to the coverage limitations described in subparagraphs (A) and (B) of section 1304(b)(4) of the National Flood Insurance Act of 1968 (42 U.S.C. 4011(b)(4)), as added by subsection (a)(5) of this section.
Sec. 5 Monthly installment payment of premiums
Authority— Subsection (g) of section 1308 of the National Flood Insurance Act of 1968 (42 U.S.C. 4015(g)) is amended—
by striking the subsection designation and all that follows through “With respect” and inserting the following:
“(g) Frequency of premium collection
“(1) Options—With respect”
by adding at the end the following:
“(2) Monthly installment payment of premiums
“(A) Exemption from rulemaking—Until such time as the Administrator promulgates regulations implementing paragraph (1) of this subsection, the Administrator may adopt policies and procedures, notwithstanding any other provisions of law and in alignment and consistent with existing industry escrow and servicing standards, necessary to implement such paragraph without undergoing notice and comment rulemaking and without conducting regulatory analyses otherwise required by statute, regulation, or Executive order.
“(B) Pilot program—The Administrator may initially implement paragraph (1) of this subsection as a pilot program that provides for a gradual phase-in of implementation.
“(C) Policyholder protection—The Administrator may—
“(i) during the 12-month period beginning on the date of the enactment of this subparagraph, charge policyholders choosing to pay premiums in monthly installments a fee for the total cost of the monthly collection of premiums not to exceed $25 annually; and
“(ii) after the expiration of the 12-month period referred to in clause (i), adjust the fee charged annually to cover the total cost of the monthly collection of premiums as determined by the report submitted pursuant to subparagraph (D).
“(D) Report—Not later than six months after the date of the enactment of this paragraph, the Comptroller General shall submit a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate, that sets forth all of the costs associated with the monthly payment of premiums, including any up-front costs associated with infrastructure development, the impact on all policyholders including those that exercise the option to pay monthly and those that do not, options for minimizing the costs, particularly the costs to policyholders, and the feasibility of adopting practices that serve to minimize costs to policyholders such as automatic payments and electronic payments.
“(E) Annual Reports—On an annual basis, the Administrator shall report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate the ongoing costs associated with the monthly payment of premiums.”
Implementation— Clause (ii) of section 1307(a)(1)(B) of the National Flood Insurance Act of 1968 (42 U.S.C. 4014(a)(1)(B)(ii)) is amended by inserting before “any administrative expenses” the following: “the costs associated with the monthly collection of premiums provided for in section 1308(g) (42 U.S.C. 4015(g)), but only if such costs exceed the operating costs and allowances set forth in clause (i) of this subparagraph, and”.
Sec. 6 Premium rates for certain mitigated properties
Mitigation strategies— Paragraph (1) of section 1361(d) of the National Flood Insurance Act of 1968 (42 U.S.C. 4102(d)(1)) is amended—
in subparagraph (A), by striking “and” at the end;
in subparagraph (B), by striking “and” at the end; and
by inserting after subparagraph (B) the following new subparagraphs:
“(C) with respect to buildings in dense urban environments, methods that can be deployed on a block or neighborhood scale; and
“(D) elevation of mechanical systems; and”
Mitigation credit— Subsection (k) of section 1308 of the National Flood Insurance Act of 1968 (42 U.S.C. 4015(k)) is amended—
by striking “shall take into account” and inserting the following:
“(1) take into account”
in paragraph (1), as so designated by the amendment made by paragraph (1) of this subsection, by striking the period at the end and inserting “; and”; and
by adding at the end the following new paragraph:
“(2) offer a reduction of the risk premium rate charged to a policyholder, as determined by the Administrator, if the policyholder implements any mitigation method described in paragraph (1).”
Sec. 7 Provision of Community Rating System premium credits to maximum number of communities practicable
Subsection (b) of section 1315 of the National Flood Insurance Act of 1968 (42 U.S.C. 4022(b)) is amended—
in paragraph (2), by striking “may” and inserting “shall”; and
in paragraph (3), by inserting “, and the Administrator shall provide credits to the maximum number of communities practicable” after “under this program”.
Sec. 8 Participation studies
Federal entities for lending regulation—
In general— The Federal entities for lending regulation shall conduct an annual study regarding the rate at which persons who are subject to the mandatory purchase requirement are complying with that requirement.
Submission to Congress— The Federal entities for lending regulation shall submit the result of each study conducted under paragraph (1) to the appropriate committees of Congress.
FEMA—
In general— The Administrator of the Federal Emergency Management Agency shall conduct an annual study regarding the rate at which individuals who live in areas that have not been identified, under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.) or the Flood Disaster Protection Act of 1973 (42 U.S.C. 4002 et seq.), as having a special flood hazard participate in, or receive financial assistance under, the National Flood Insurance Program.
Submission to Congress— The Administrator shall submit the result of each study conducted under paragraph (1) to the appropriate committees of Congress.
GAO—
In general— The Comptroller General of the United States shall conduct a study of the implementation and efficacy of the requirements of section 102 of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a). Such study shall at minimum consider the following questions:
How effectively do Federal agencies, regulated lending institutions, and Federal entities for lending regulation implement the requirements of section 102 of the Flood Disaster Protection Act of 1973?
Does the current implementation of Flood Disaster Protection Act of 1973 align with the congressional findings and purposes described in section 2(b) of such Act (42 U.S.C. 4002)?
What is the current level of compliance with section 102?
What are the estimated historical impacts on revenue to the National Flood Insurance Program based on the current level of compliance of section 102?
Is the current monitoring and tracking framework in place sufficient to ensure compliance with section 102?
What is the best way to establish a consolidated, comprehensive, and accurate repository of data on compliance with section 102?
What, if any, unintended consequences have resulted from the requirements and implementation of section 102?
How can Federal agencies and regulated lending institutions improve compliance with section 102?
Report— Not later than the expiration of the 18-month period beginning on the date of the enactment of this Act, the Comptroller General shall submit a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate regarding the findings and conclusions of the study conducted pursuant to this subsection.
Sec. 9 Disclosure of flood risk information upon transfer of property
In general— Chapter 1 of the National Flood Insurance Act of 1968 (42 U.S.C. 4011 et seq.) is amended by adding at the end the following new section:
“1326. Disclosure of flood risk information upon transfer of property
“(a) Requirement for participation in program—After September 30, 2022, no new flood insurance coverage may be provided under this title for any real property located in any area (or subdivision thereof) unless an appropriate body has imposed, by statute or regulation, a duty on any seller or lessor of improved real estate located in such area to provide to any purchaser or lessee of such property a property flood hazard disclosure which the Administrator has determined meets the requirements of subsection (b).
“(b) Disclosure requirements—A property flood hazard disclosure for a property shall meet the requirements of this subsection only if the disclosure—
“(1) is made in writing;
“(2) discloses any actual knowledge of the seller or lessor of—
“(A) prior physical damage caused by flood to any building located on the property;
“(B) prior insurance claims for losses covered under the National Flood Insurance Program or private flood insurance with respect to such property;
“(C) any previous notification regarding the designation of the property as a multiple loss property; and
“(D) any Federal legal obligation to obtain and maintain flood insurance running with the property, such as any obligation due to a previous form of disaster assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act received by any owner of the property; and
“(3) is delivered by or on behalf of the seller or lessor to the purchaser or lessee before such purchaser or lessee becomes obligated under any contract for purchase or lease of the property.”
Availability of flood insurance coverage— Subsection (c) of section 1305 of the National Flood Insurance Act of 1968 (42 U.S.C. 4012(c)) is amended—
in paragraph (1), by striking “and” at the end;
in paragraph (2), by striking the period at the end and inserting “; and”; and
by adding at the end the following new paragraph:
“(3) given satisfactory assurance that by September 30, 2022, property flood hazard disclosure requirements will have been adopted for the area that meet the requirements of section 1326.”
Sec. 10 GAO study regarding buyout practices
Definitions— In this section—
the term Administrator means the Administrator of the Federal Emergency Management Agency;
the term appropriate committees of Congress means—
the Committee on Banking, Housing, and Urban Affairs of the Senate;
the Committee on Homeland Security and Governmental Affairs of the Senate;
the Committee on Financial Services of the House of Representatives; and
the Committee on Transportation and Infrastructure of the House of Representatives;
the terms buyout practice and buyout program mean a practice or program, as applicable, under which the Administrator provides assistance to State and local governments so that those entities may acquire flood-damaged properties committed to open space use in perpetuity in accordance with section 404(b)(2) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170c(b)(2));
the term eligible property owner means a policyholder under the National Flood Insurance Program with a household income that is not more than 120 percent of the mean household income for the community in which the primary residence of the policyholder is located;
the term National Flood Insurance Program means the program established under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.);
the term repetitive loss structure has the meaning given the term in section 1370(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4121(a)); and
the term severe repetitive loss structure has the meaning given the term in section 1366(h) of the National Flood Insurance Act of 1968 (42 U.S.C. 4104c(h)).
Study required— The Comptroller General of the United States shall conduct a study to assess—
the efficacy of buyout practices, as in effect on the date on which the study is conducted; and
ways to streamline the buyout practices described in paragraph (1) in order to provide more timely assistance to a larger number of State and local governments.
Considerations and analysis— The study conducted under subsection (b) shall consider and analyze the following:
To the extent possible, current (as of the date on which the study is conducted) and future trends with respect to repetitive loss structures and severe repetitive loss structures that are insured under the National Flood Insurance Program, including, with respect to both inland and coastal areas—
changes in flood risk, flood frequency, and flood magnitude since the inception of the National Flood Insurance Program; and
projections for changes in flood risk, flood frequency, and flood magnitude by 2025, 2050, and 2075.
To the extent possible, buyout practices (as of the date on which the study is conducted), including—
the availability of funding sources for buyout programs through various grant programs;
the total number of properties acquired though buyout programs;
the average length of time for a State or local government to acquire a flood-damaged property under a buyout program, with that period beginning on the date on which the State or local government, as applicable, begins participating in the buyout program;
an estimate of the number of flood-damaged properties that could be acquired from willing property owners under buyout programs with the full cooperation of State and local governments;
the socioeconomic status of recipients of buyouts under buyout programs; and
examples of successful buyout programs, including best practices employed.
Administrative, financial, or temporal constraints that may impede the timely acquisition of properties under a buyout program, including—
a lack of communication or cooperation between the Administrator and the State and local governments that purchase properties under a buyout program;
pressures to redevelop a property after acquiring a property through a buyout program; and
a lack of adequate funding.
Potential options, methods, and strategies to address the constraints identified under paragraph (3), including evaluating the feasibility of—
a pilot program under which—
an eligible property owner may agree, before a flood event occurs, to have the primary single-family residence of the eligible property owner purchased after the residence has been substantially damaged by a flood;
the Administrator may provide—
financial assistance to State and local governments that are willing to participate in the program to purchase and acquire the properties of owners that have incurred substantial damage from a flood event; and
a premium credit as an incentive to eligible property owners to agree to participate in the program;
properties that are acquired—
shall be maintained as open space in accordance with section 404(b)(2) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170c(b)(2)); and
may be used for non-structural mitigation, conservation, and recreational purposes; and
not fewer than 5 and not more than 10 State and local governments shall participate; and
the role that nonprofit organizations could play in making buyouts more readily available or more efficient, similar to the role that those organizations play in the acquisition of properties for conservation purposes.
The ecological, financial, and flood risk reduction benefits that buyout practices, as in effect on the date on which the study is conducted, provide, which shall—
take into account the differences between inland and coastal areas; and
include—
examples in which ecosystem restoration and other nature-based approaches have enhanced the reduction of flood risk; and
recommendations for best practices.
To the extent possible, an assessment of how the Administrator may use buyout programs to reduce future flood disaster recovery costs that are attributable to future projections of flood risk as a result of sea level rise, population changes, subsidence, and other factors.
A cost-benefit analysis of mitigation and buy-out projects and programs, including an assessment of opportunities and challenges for leveraging different Federal resources and funding to maximize the value of Federal investment in disaster mitigation.
Report—
In general— Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States shall submit to the appropriate committees of Congress and the Administrator a report that sets forth the analysis, conclusions, and recommendations resulting from the study conducted under subsection (b).
Contents— The report submitted under paragraph (1) shall detail the feasibility of the Administrator establishing, and the processes required for the Administrator to establish, an alternative buyout program, such as the pilot program described in subsection (c)(4)(A).