Congressional Research Service: 'Introduction to National Flood Insurance Program' (Part 1 of 3)

WASHINGTON, Jan. 7 (TNSrep) -- The Congressional Research Service issued the following report (No. R44593) on Jan. 6, 2023, entitled "Introduction to the National Flood Insurance Program" by Diane P. Horn, flood insurance and emergency management specialist, and Baird Webel, acting section research manager.

Here are excerpts:

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Summary

The National Flood Insurance Program (NFIP) was established by the National Flood Insurance Act of 1968 (NFIA; 42 U.S.C. Sec.4001 et seq.) and was most recently reauthorized to September 30, 2023, through a series of short-term reauthorizations. The general purpose of the NFIP is both to offer primary flood insurance to properties with significant flood risk, and to reduce flood risk through the adoption of floodplain management standards. Communities volunteer to participate in the NFIP in order to have access to federal flood insurance, and in return are required to adopt minimum standards.

The NFIP is managed by the Federal Emergency Management Agency (FEMA), through its subcomponent the Federal Insurance and Mitigation Administration (FIMA). FEMA manages a Risk Mapping, Assessment and Planning (Risk MAP) process to produce Flood Insurance Rate Maps (FIRMs). Depicted on FIRMs are Special Flood Hazard Areas (SFHAs), which are areas exposed to a 1% or greater risk of annual flooding. FIRMs vary in age across the country, and are updated on a prioritized basis. The Risk MAP process provides extensive outreach and appeal opportunities for communities. Updating a community's FIRMs can take three to five years or more. Participating communities must adopt a flood map and enact minimum floodplain standards to regulate development in the SFHA. FEMA encourages communities to enhance their floodplain standards by offering reduced premium rates through the Community Rating System (CRS). FEMA also manages a Flood Mitigation Assistance (FMA) grant program using NFIP revenues to further reduce comprehensive flood risk. Participating communities that fail to adopt FIRMs or maintain minimum floodplain standards can be put on probation or suspended from the NFIP. In communities that do not participate in the NFIP, or have been suspended, individuals cannot purchase NFIP insurance. Individuals in these communities also face challenges receiving federal disaster assistance in flood hazard areas.

NFIP insurance uses one of three types of Standard Flood Insurance Policies (SFIPs). SFIPs have maximum coverage limits set by law. Any federal entity that makes, guarantees, or purchases mortgages must, by law, require property owners in the SFHA to purchase flood insurance, generally through the NFIP. In moderate risk areas, community members may purchase Preferred Risk Policies (PRPs) that offer less costly insurance. The day-to-day sale, servicing, and claims processing of NFIP policies are conducted by private industry partners. Most policies are serviced by companies that are reimbursed through the Write Your Own (WYO) Program.

The premium rate for most NFIP policies is intended to reflect the true flood risk. However, Congress has directed FEMA to subsidize flood insurance for properties built before the community's first FIRM (i.e., the pre-FIRM subsidy). In addition, FEMA "grandfathers" properties at their rate from past FIRMs to updated FIRMs through a cross-subsidy. These subsidies are being phased out under FEMA's new rating approach, known as Risk Rating 2.0.

Congress has provided appropriations to the NFIP for some of the cost of Risk MAP. Congress also authorizes the use of premium revenues for other NFIP costs, including administration, salaries, and other expenses. NFIP premiums also include other charges, such as a Federal Policy Fee, a Reserve Fund assessment, and a surcharge to help fund the NFIP. In October 2017, Congress cancelled $16 billion of NFIP debt, making it possible for the program to pay claims for Hurricanes Harvey, Irma, and Maria. The NFIP currently owes $20.525 billion to the U.S. Treasury, leaving $9.9 billion in borrowing authority from a $30.425 billion limit in law. This debt is serviced by the NFIP and interest is paid through premium revenues.

After September 30, 2023, key authorities of the NFIP, such as the authority to issue new insurance contracts, will expire if they are not reauthorized by Congress.

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Contents

Introduction ... 1

Purpose of the NFIP ... 1

Reduction of Comprehensive Flood Risk ... 2

Risk Mapping, Assessment, and Planning (Risk MAP) and Flood Insurance Rate Maps (FIRMs) ... 3

Flood Zones ... 3

Updating Flood Maps ... 4

Map Corrections ... 5

State and Local Land Use Controls ... 6

Flood Mitigation Assistance Grants ... 7

Infrastructure Funding for Flood Mitigation ... 8

Primary Flood Insurance Through the NFIP ... 9

Standard Flood Insurance Policies (SFIPs) ... 9

Mandatory Mortgage Purchase Requirement ... 10

Preferred Risk Policies (PRPs) ... 12

Increased Cost of Compliance (ICC) Coverage ... 13

Servicing of Policies and Claims Management ... 13

Pricing and Premium Rate Structure ... 15

Pre-FIRM Subsidy ... 16

Newly Mapped Subsidy ... 18

Grandfathering Cross-Subsidy ... 19

Community Rating System ... 19

Affordability Study and Framework ... 20

Risk Rating 2.0 ... 21

Nonparticipating Communities and Community Suspension ... 21

Funding ... 22

Premium Fees and Surcharges ... 23

Appropriations and Offsetting Receipts ... 24

Borrowing from the U.S. Treasury, NFIP Debt ... 27

NFIP Purchase of Reinsurance ... 28

Expiration of Certain NFIP Authorities ... 31

Tables

Table 1. Flood Zones as Depicted on Flood Insurance Rate Maps (FIRMs) ... 3

Table 2. Maximum Available Coverage Limits for SFIPs by Occupancy Type ... 9

Table 3. Types of Compensation for WYO Companies ... 15

Table 4. Phaseout of NFIP Pre-FIRM Premium Subsidy Following Legislation ... 17

Table 5. Budget Authority for the NFIP, FY2015-FY2022 ... 25

Table 6. Short-Term Extensions of the NFIP Since End of FY2017 ... 31

Contacts

Author Information ... 32

Acknowledgments ... 32

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Introduction

The National Flood Insurance Program (NFIP) was created by the National Flood Insurance Act of 1968 (NFIA)./1

Since the end of FY2017, 25 short-term NFIP reauthorizations have been enacted (see Table 6). The NFIP is currently authorized until September 30, 2023./2

The last long-term reauthorization of the NFIP was by the Biggert-Waters Flood Insurance Reform Act of 2012 (hereinafter BW-12),/3 from July 6, 2012, to September 30, 2017. Congress amended elements of BW-12, but did not extend the NFIP's authorization further, in the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA)./4

The NFIP is managed by the Federal Emergency Management Agency (FEMA), through its subcomponent the Federal Insurance and Mitigation Administration (FIMA). As of December 2022, the NFIP had nearly 5 million flood insurance policies providing over $1.3 trillion in coverage. The program collects about $4.6 billion in revenue from policyholders' premiums, fees, and surcharges./5

Nationally, as of January 2023, over 22,000 communities in 56 states and jurisdictions participated in the NFIP./6

According to FEMA, the NFIP's flood management standards have saved the nation almost $2.4 billion annually in flood losses avoided./7

This report provides introductory information on key components of the NFIP, ranging from floodplain mapping to the standard flood insurance forms. This report will be updated as significant revisions are made to the NFIP through legislation or administrative action.

Purpose of the NFIP

In the original NFIP statute, Congress stipulated that "a program of flood insurance can promote the public interest by providing appropriate protection against the perils of flood losses and encouraging sound land use by minimizing exposure of property to flood losses."/8

Congress had found that post-disaster flood losses, and the subsequent federal disaster relief assistance to help communities recover from those flood losses, had "placed an increasing burden on the Nation's resources" and that as a matter of national policy "a reasonable method of sharing the risk of flood losses is through a program of flood insurance which can complement and encourage preventive and protective measures."/9

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1 Title XIII of P.L. 90-448, as amended, 42 U.S.C. Sec.4001 et seq.

2 P.L. 117-328.

3 Title II of P.L. 112-141.

4 P.L. 113-89.

5 Statistics on the NFIP policy and claims are available from FEMA, The Watermark: National Flood Insurance Program Financial Statements, at https://www.fema.gov/flood-insurance/work-with-nfip/watermark-financialstatements, and from FEMA's website at https://nfipservices.floodsmart.gov//reports-flood-insurance-data.

6 Detailed information about which communities participate and where is available from the Community Status Book, found on FEMA's website at https://www.fema.gov/flood-insurance/work-with-nfip/community-status-book.

7 U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, Reauthorization of the National Flood Insurance Program, Part II, Statement of David Maurstad, Deputy Associate Administrator for Insurance and Mitigation, Federal Insurance and Mitigation Administration, FEMA, 117th Cong., 1st sess., June 17, 2021, p.2, https://www.banking.senate.gov/imo/media/doc/Maurstad%20Testimony%206-17-21.pdf.

8 See 82 Stat. 573 for text in original statute (Sec.1302(c) of P.L. 90-448). This language remains in statute (see 42 U.S.C. Sec.4001(c)).

9 See 82 Stat. 573 for text in original statute (Sec.1302(a) of P.L. 90-448). This language remains in statute (see 42 U.S.C. Sec.4001(a)).

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At the time of establishment of the NFIP, as is generally still the case today, it was found that "many factors have made it uneconomic for the private insurance industry alone to make flood insurance available to those in need of such protection on reasonable terms and conditions."/10

Thus, the NFIP essentially has two interrelated policy purposes that can be summarized as

1. to provide access to primary flood insurance, thereby allowing for the transfer of some of the financial risk of property owners to the federal government, and

2. to mitigate and reduce the nation's comprehensive flood risk/11 through the development and implementation of floodplain management standards.

A core design feature of the NFIP is that communities are not required to participate in the program by any law or other regulation./12

Rather, communities in the United States voluntarily participate in the NFIP generally as a means of securing access to the primary flood insurance offered by the NFIP. Essentially, the NFIP is structured so that the availability of primary flood insurance through the NFIP (purpose #1 from above) is tied to the adoption and enforcement of floodplain management standards by participating communities (purpose #2). FEMA is only allowed to provide flood insurance to "those States or areas (or subdivisions thereof)" where "adequate land use and control measures" have been adopted that "are consistent with the comprehensive criteria for land management and use developed" by the NFIP./13

Thus, communities that participate in the NFIP, and therefore whose residents may access the NFIP's primary flood insurance, also adopt through local or state laws minimum floodplain management standards that are described in FEMA regulations.

Reduction of Comprehensive Flood Risk

The NFIP accomplishes the goal of reducing comprehensive flood risk primarily by requiring participating communities to

* collaborate with FEMA to develop and adopt flood maps called Flood Insurance Rate Maps (FIRMs), and

* enact minimum floodplain standards based on those flood maps.

In addition, premiums collected from the sale of insurance in the NFIP finance a Flood Mitigation Assistance (FMA) grant program that reduces overall flood risk. This section of the report briefly discusses each of these means of reducing comprehensive flood risk.

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10 See 82 Stat. 573 for text in original statute (Sec.1302(b)(1) of P.L. 90-448). This language remains in statute (see 42 U.S.C. Sec.4001(b)(1)).

11 In the context of this report, comprehensive flood risk means that the risk includes both financial risk (i.e., physical damage to property), but also the risk to human life.

12 44 C.F.R. Sec.59.1 defines community as any State or area or political subdivision thereof, or any Indian tribe or authorized tribal organization, or Alaska Native village or authorized native organization, which has authority to adopt and enforce flood plain management regulations for the areas within its jurisdiction.

13 42 U.S.C. Sec.4012(c)(2).

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Risk Mapping, Assessment, and Planning (Risk MAP) and Flood Insurance Rate Maps (FIRMs)

FEMA is responsible for undertaking Flood Insurance Studies (FISs) nationwide to identify areas within the United States having special flood, mudslide, and flood-related erosion hazards; assess the flood risk; and designate insurance zones./14

FEMA develops, in coordination with participating communities, flood maps called FIRMs using these FISs that depict the community's flood risk and floodplain. In BW-12, Congress revised the authorities of FEMA as it relates to flood hazard mapping to formally establish what FEMA has called the Risk Mapping, Assessment and Planning (Risk MAP) process./15

Though formally authorized in BW-12, FEMA started the Risk MAP process at the request of Congress in 2009./16

While FEMA is largely responsible for the creation of the FIRM, the community itself must pass the map into its local or state law in order for the map to be effective.

Flood Zones

An area of specific focus on the FIRM is the Special Flood Hazard Area (SFHA). The SFHA is intended to distinguish the flood risk zones that have a chance of flooding during a "1 in 100 year flood" or greater frequency. This means that properties in the SFHA have a risk of 1% or greater risk of flooding every year. Table 1 shows flood-risk zones that are depicted on the FIRMs. Zones A (A1-30), AE, AH, AO, V, VE, VO, and V1-30 constitute the designated SFHA on the community's FIRM. V zones are distinguished from A zones in that V zones are subject to wave action (i.e., coastal flooding). Two other designations for classifying zones in the SFHA are the Zone AR, which is an area where a levee or similar structure is determined not to provide sufficient flood protection, but is undergoing restoration; and the Zone A99, an area where a federal flood protection structure is under construction to provide the necessary flood protection standard.

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14 See 42 U.S.C. Sec.4101 and 44 C.F.R. Part 65.

15 Sec.100216 of P.L. 112-141, 126 Stat. 927, as codified at 42 U.S.C. Sec.4101b.

16 Congress called for the creation of a new five-year National Flood Map Maintenance Plan for FY2010-FY2014 in the Explanatory Statement which accompanied the Department of Homeland Security Appropriations Act, 2009 (P.L. 110-329). For the initial Risk MAP plan, see FEMA, Risk Mapping, Assessment, and Planning (Risk MAP) Multi-Year Plan: Fiscal Years 2010-2014, March 16, 2009, at http://www.fema.gov/media-library-data/20130726-1650-204904732/fema_risk_map_plan.pdf.

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Table 1. Flood Zones as Depicted on Flood Insurance Rate Maps (FIRMs)

Source: Adapted from 44 C.F.R. Sec.60.3 by CRS.

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Updating Flood Maps

Flood maps adopted across the country vary considerably in age and in quality. While some FIRMs may have last been developed and adopted by a community in the 1980s, especially in rural areas of the country, most communities will have maps adopted within the past 15 to 20 years./17

All official FIRMs can be accessed, and are searchable by address and location, on a FEMA website called the Map Service Center,/18 and modern FIRMs can be digitally viewed via the Geographic Information System in the National Flood Hazard Layer./19

There is no consistent, definitive timetable for when a particular community will have their maps revised and updated. FEMA uses a process called the Coordinated Needs Management Strategy to prioritize, identify, and track the lifecycle of mapping needs of Risk MAP.20 Generally, flood maps may require updating when there have been significant new building developments in or near the flood zone, changes to flood protection systems (e.g., levees and sand dunes), and environmental changes in the community. Because of the variability in how and when a FIRM is updated, for example, one community may be undergoing the process of updating its map while a neighboring community is not, and one community may have had its map last updated in 2020 while a neighboring community had its last revised in 2005, etc.

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17 By law, FEMA is required to "assess the need to revise and update all floodplain areas and flood risk zones" every five years, but not necessarily update the maps. See 42 U.S.C. Sec.4101(e).

18 See the Map Service Center website at https://msc.fema.gov/portal/home. In addition, one can review the last revision date of a community's Flood Insurance Rate Map (FIRM) in the Community Status Book found at https://www.fema.gov/flood-insurance/work-with-nfip/community-status-book.

19 For more on the NFHL, and directions for accessing it, see FEMA's website at https://www.fema.gov/flood-maps/tools-resources/flood-map-products/national-flood-hazard-layer.

20 For more, see FEMA, Coordinated Needs Management Strategy, at https://www.fema.gov/flood-maps/toolsresources/risk-map/coordinated-needs-management-strategy.

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There are statutory guidelines for how FEMA is allowed to develop new FIRMs for a community. These guidelines require, for example, FEMA to conduct extensive communication and outreach efforts with the community during the mapping process and include various minimum waiting periods after intermediary steps are taken in the process./21 In addition, during this process, communities are asked to submit pertinent data concerning their flood hazards, flooding experience, mitigation plans to avoid potential flood hazards, and estimates of historical and prospective economic impacts flooding has had on the community./22 Generally, FEMA seeks to make the Risk MAP process a collaborative process with local communities to encourage a joint sense of "ownership" of the maps. There are also legal requirements allowing communities and individuals to appeal during the process of updating FIRMs./23 This appeal process now includes the option, first authorized in BW-12, for communities to appeal to a Scientific Resolution Panel regarding a proposed FIRM./24

In BW-12, Congress reestablished and reauthorized a council called the Technical Mapping Advisory Council (TMAC)./25 The TMAC is broadly authorized to review and recommend improvements to how FEMA produces and disseminates flood hazard, flood risk, and flood map information./26 In particular, the TMAC is authorized to recommend to FEMA "mapping standards and guidelines for - (A) flood insurance rate maps [FIRMs]; and (B) data accuracy, data quality, data currency, and data eligibility."/27 Currently, the TMAC estimates that the production of a new or revised FIRM is designed to take three to five years under the Risk MAP program, but can often take as long as six and a half years or longer./28 The TMAC has suggested that the ideal Risk MAP project timeline is 25 months./29

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21 See, for example, 42 U.S.C. Sec.4101b(d)(1) and 42 U.S.C. Sec.4104.

22 See, for example, 44 C.F.R. Sec.66.1.

23 Primarily, see 42 U.S.C. Sec.4104(c)-(g).

24 Sec.100218(a) of P.L. 112-141, 126 Stat. 930, as codified at 42 U.S.C. Sec.4104-1. For more on the Scientific Resolution Panel, see the Panel's website at http://www.floodsrp.org/.

25 Section 100215, Title II of P.L. 112-141, 126 Stat. 924, as codified at 42 U.S.C. Sec.4101a. Congress originally authorized the creation of the Technical Mapping Advisory Council (TMAC) in 1994 (see Sec.576 of P.L. 103-325, 108 Stat. 2280). However, in that originating statute, the TMAC was required to terminate "5 years after the date on which all members of the Council have been appointed." BW-12 did not include a termination clause for TMAC, thus making it permanent. BW-12 describes the conditions for membership, pay, and other matters relating to the operations and structure of the TMAC.

26 For a list of duties, see 42 U.S.C. Sec.4101a(c).

27 42 U.S.C. Sec.4101a(c)(2).

28 For further details on the remapping process, see Section 4.4.2 in Technical Mapping Advisory Council, Annual Report, 2015, December 2015, pp. 4-55, and the section on Process, in Technical Mapping Advisory Council, National Flood Mapping Program Review, June 2016, pp. 13-17, both at https://www.fema.gov/flood-maps/guidance-partners/technical-mapping-advisory-council.

29 Ibid. See Figure 4-10.

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Map Corrections

After a map is finalized and adopted by a community, it can still be revised to correct for errors in map accuracy. To correct these inaccuracies, FEMA allows individuals and communities to request letters amending or revising the flood map. In general, two primary circumstances may result in changes to the flood map. First, the natural elevation of property may be incorrectly accounted for on a FIRM, and that natural elevation is such that the property should not be considered part of the SFHA. Generally, in this circumstance, an individual or community may request a Letter of Map Amendment (LOMA)./30 Second, a community may feel that a physical development in the community has resulted in a reduction of the flood risk for areas previously mapped in the floodplain. Generally, in this circumstance, the community may request a Letter of Map Revision (LOMR)./31 In either a LOMA or LOMR, the decision to correct a map must be based on scientific information validating the inaccuracy of the current map. In most circumstances, the cost of requesting the map correction is borne by the community or individual./32

State and Local Land Use Controls

As authorized in law, FEMA has developed a set of minimum floodplain management standards that are intended to (1) constrict the development of land which is exposed to flood damage where appropriate, (2) guide the development of proposed construction away from locations which are threatened by flood hazards, (3) assist in reducing damage caused by floods, and (4) otherwise improve the long-range land management and use of flood-prone areas./33 Communities are required to adopt these minimum floodplain management standards in order to participate in the NFIP./34 FEMA has set forth the minimum standards it requires for participation in the NFIP in federal regulations./35 Though the standards appear in federal regulations, the standards only have the force of law because they are adopted and enforced by a state or local government. Key conditions of the NFIP minimum standards include, among many other conditions, that communities

* require permits for development in the SFHA;

* require elevation of the lowest floor of all new residential buildings in the SFHA to or above the Base Flood Elevation (BFE);/36

* restrict development in the regulatory floodway to prevent increasing the risk of flooding; and

* require certain construction materials and methods that minimize future flood damage./37

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30 For more on LOMAs, see 44 C.F.R. Part 70, or FEMA's website at https://www.fema.gov/glossary/letter-mapamendment-loma.

31 For more on LOMRs, see 44 C.F.R. Part 72, or FEMA's website at https://www.fema.gov/flood-maps/change-yourflood-zone/loma-lomr-f.

32 For detailed information on the process of revising and amending NFIP maps, please see FEMA, Appeals, Revisions, and Amendments to National Flood Insurance Program Maps: A Guide for Community Officials, December 2009, at https://www.hsdl.org/?abstract&did=30227.

33 42 U.S.C. Sec.4102(c).

34 42 U.S.C. Sec.4022(a)(1).

35 See 44 C.F.R. Part 60, particularly 44 C.F.R. Sec.60.3.

36 The Base Flood Elevation (BFE) is the water-surface elevation of the base flood, which is the 1%-annual-chance flood, commonly called the 100-year flood. The probability is 1% that rising water will reach BFE height in any given year. The depth of the base flood is calculated by subtracting the ground elevation from the BFE.

37 For more on the NFIP minimum floodplain standards, see, for example, FEMA, NFIP Floodplain Management, at https://www.fema.gov/floodplain-management-requirements and selected other sources: Christopher P. Jones, William L. Coulbourne, and Jamie Marshall, et al., Evaluation of the National Flood Insurance Program's Building Standards: Prepared as part of the 2001-2006 Evaluation of the National Flood Insurance Program, American Institutes of Research, October 2006, at https://www.fema.gov/sites/default/files/2020-07/fema_nfip_eval_building_standards.pdf.

Association of State Floodplain Managers, A Guide for Higher Standards in Floodplain Management, March 2013, at https://s3-us-west-2.amazonaws.com/asfpm-library/General/Higher_Standards_Floodplain_Management_ASFPM_2013.pdf.

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Legal enforcement of the floodplain management standards is the responsibility of the participating NFIP community. However, FEMA, often in cooperation with state governments, will conduct community assistance visits (CAVs) to monitor how and if a community is adequately enforcing its floodplain ordinances./38 Two previous reviews commissioned by FEMA on community enforcement of minimum floodplain standards have estimated that the nationwide rate of community compliance with the standards is 70% to 85%,/39 and that between 58% and 70% of buildings are built in full compliance with the standards./40 A community that has been found failing to enforce the floodplain management standards may be placed on probation and ultimately suspended from the NFIP (as discussed later in this report)./41 As these standards are just minimum requirements, states and communities can elect to adopt higher standards as a means of mitigating flood risk. In addition, FEMA operates a program, called the Community Rating System, to incentivize NFIP communities to adopt more rigorous floodplain management standards (also discussed later in this report)./42

Flood Mitigation Assistance Grants

To reduce comprehensive flood risk, FEMA also operates a Flood Mitigation Assistance (FMA) Grant Program that is funded through revenue collected by the NFIP./43 The FMA Program/44 awards grants for a number of purposes, including state and local mitigation planning; the elevation, relocation, demolition, or flood proofing of structures; the acquisition of properties; and other activities./45

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38 For more information on CAVs, see FEMA, Guidance for Conducting Community Assistance Contacts and Community Assistance Visits, F-776, April 2011, at https://s3-us-west-2.amazonaws.com/asfpm-library/Mentoring/FEMA_2011_guidance_conducting_community.pdf.

39 A community was estimated to be compliant with the floodplain management standards if it had no program deficiencies or violations or if it addressed them satisfactorily within two years [following a community assistance visit]. As another way of gauging overall community compliance, FEMA and state personnel were asked in interviews to give estimates of the proportion of compliant communities in their 'territories.' Their responses ranged from 0 percent compliant for some areas to 100 percent for others, but averaged to 78 percent compliant, the median of the range calculated from existing records.

See Jacquelyn L. Monday, Kristen Y. Grill, and Paul Esformes, et al., An Evaluation of Compliance with the National Flood Insurance Program Part A: Achieving Community Compliance, American Institutes of Research, Prepared as part of the 2001-2006 Evaluation of the National Flood Insurance Program, November 2006, p. x, at https://www.fema.gov/sites/default/files/2020-07/fema_nfip_eval_community_compliance_a.pdf.

40 Margaret L. Mathis and Suzanne Nicholson, An Evaluation of Compliance with the National Flood Insurance Program Part B: Are Minimum Building Requirements Being Met?, Dewberry, Prepared as part of the 2001-2006 Evaluation of the National Flood Insurance Program, October 2006, p. viii, at https://www.fema.gov/sites/default/files/2020-07/fema_nfip_eval_community_compliance_b.pdf.

41 See the "Nonparticipating Communities and Community Suspension" section of this report.

42 See the "Community Rating System" section of this report.

43 42 U.S.C. Sec.4104c.

44 In BW-12, Congress mandated that the grant assistance previously delivered by the Repetitive Flood Claims (RFC) and the Severe Repetitive Loss (SLR) grant programs should be unified into a single program, Flood Mitigation Assistance (FMA), by rescinding the authorization for the SLR program and the RFC program. See Sections 100225(b)-(c) of P.L. 112-141, respectively.

* * *

FMA grants are only available to communities which participate in the NFIP, to assist in efforts to reduce or eliminate flood damage to buildings and structures insurable under the NFIP, particularly repetitive loss/46 and severe repetitive loss/47 properties.

The FMA Program has $800 million available for FY2022./48 FMA funding is available until it is expended, so in certain years the amount awarded may exceed the amount authorized by Congress in an appropriation act for a specific fiscal year./49 A database of FMA grants that is available from FEMA indicates that $1.86 billion in projects was approved between 1996 and 2022./50

Infrastructure Funding for Flood Mitigation

The Infrastructure Investment and Jobs Act/51 appropriated $3.5 billion for the FMA program, with $700 million for each of FY2022 to FY2026. This represents a significant increase in the amount of funding available for flood mitigation, and the first time that funding has been appropriated for the FMA program. The first project to be funded with the IIJA funding is the Swift Current Initiative, which seeks to expedite FMA awards after a flooding event and reduce the complexity of the application process, with the goal of obligating FMA dollars for NFIP-insured and substantially damaged properties as quickly and equitably as possible after a flood. Swift Current allocates $60 million to Louisiana, Mississippi, New Jersey, and Pennsylvania. These states were selected because they were affected by Hurricane Ida and have the highest repetitive loss and severe repetitive loss of NFIP-insured unmitigated properties, and the highest total insurance claims within their respective FEMA regions./52

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46 42 U.S.C. Sec.4121(a)(7) defines repetitive loss structure as 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 (B) at the time of the second incidence of flood-related damage, the contract for flood insurance contains increased cost of compliance coverage.

47 Severe repetitive loss properties are those that have incurred four or more claim payments exceeding $5,000 each, with a cumulative amount of such payments over $20,000; or at least two claims with a cumulative total exceeding the value of the property. See 42 U.S.C. Sec.4014(h) and 44 C.F.R. Sec.79.2(h).

48 See FEMA, Notice of Funding Opportunity (NOFO) Fiscal Year 2022 Flood Mitigation Assistance, at https://www.fema.gov/sites/default/files/documents/fema_fy22-fma-nofo_08052022_0.pdf.

49 For additional information on how the FMA program is financed, see the "Appropriations and Offsetting Receipts" section of this report.

50 This figure represents the total amount of federal assistance, without subtracting the cost share, for the three flood mitigation programs that existed during this time: SRL, RFC, and FMA. To access the database, see FEMA's website at https://www.fema.gov/openfema-data-page/hazard-mitigation-assistance-projects-v2.

51 P.L. 117-58.

52 FEMA, Swift Current Initiative, https://www.fema.gov/grants/mitigation/floods/swift-current.

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Continues with Part 2 of 3

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The report is posted at: https://crsreports.congress.gov/product/pdf/R/R44593