ments in major disasters, and for other purposes" (42 U.S.C. 18551855g); (2) a natural disaster, as determined by the Secretary of Agriculture pursuant to section 321 of the Consolidated Farmers Home Administration Act of 1961; or (3) a disaster with respect to which loans may be made under section 7(b) of the Small Business Act.

Subsection (d) provides that the term "financial assistance" as used in section 10 of the Disaster Relief Act of 1966 (which directs that Federal assistance programs be administered to avoid duplication of benefits) shall be deemed to include flood insurance made available under the program.

Section 1315. State and local land use controls

This section provides that after June 30, 1970, no new flood insurance coverage (including renewals) can be provided in any area unless an appropriate public body has adopted permanent land use and control measures, with effective enforcement provisions, which the Secretary finds consistent with the comprehensive criteria for land management and use prescribed under section 1361.

Section 1316. Properties in violation of State and local law

This section prohibits any new flood insurance on property duly declared to be in violation of State or local laws, regulations, or ordinances intended to discourge or otherwise restrict land development or occupancy in flood-prone areas.

Section 1317. Coordination with other programs

This section directs the Secretary to consult with other Federal agencies, and interstate, State, and local agencies having responsibilities for flood control, flood forecasting, and flood damage prevention, in order to assure mutual consistency between the programs of these agencies and the flood insurance program.

Section 1318. Advisory committee

Subsection (a) directs the Secretary to appoint a flood insurance advisory committee to advise him with respect to policy matters and in the preparation of regulations prescribed in accordance with the title.

Subsection (b) provides that the committee is to consist of up to 15 representatives of the insurance industry, State and local governments, lending institutions, the homebuilding industry, and the general public.

Subsection (c) provides that committee members, while attending meetings, will be compensated at a rate fixed by the Secretary, but not exceeding $100 a day, and will in addition receive travel and living expenses when serving away from their homes or regular places of business.

Section 1319. Initial program limitation

This section provides that the face amount of flood insurance coverage outstanding and in force at any given time under the program may not exceed $2.5 billion.

Section 1320. Report to the President

This section directs the Secretary to include a report on the operations of the flood insurance program in his annual report to the President for submission to the Congress.

Chapter II-Organization and Administration of the Flood Insurance Program

Section 1330. Organization and administration

This section directs the Secretary, after such consultation with representatives of the insurance industry as may be necessary, to implement the flood insurance program in accordance with part A of chapter II (which provides for an industry program with Federal financial assistance) or, if he finds it necessary, in accordance with part B (which provides for a Federal program with industry assistance).

Part A-Industry Program With Federal Financial Assistance

Section 1331. Industry flood insurance pool

Subsection (a) authorizes the Secretary to encourage and assist private insurers to join together in a pool to provide flood insurance coverage and to participate financially in underwriting the risks assumed and in adjusting and paying claims for losses.

Subsection (b) authorizes the Secretary to prescribe appropriate requirements for private insurers participating in the pool, including minimum capital or surplus or assets requirements.

Section 1332. Agreements with flood insurance pool

Subsections (a) and (b) authorize the Secretary to enter into agreements with the industry pool to carry out the program, specifying the terms and conditions under which (1) risk capital will be available for the adjustment and payment of claims, (2) the pool and its participants will participate in premiums received and profits or losses, realized, including the maximum amount of profit which might be realized, (3) operating costs and allowances might be paid, and (4) premium equalization payments and reinsurance claims will be paid. Subsection (c) provides that the agreements will also contain such provisions as the Secretary finds necessary to assure (1) no qualified insurer wishing to participate in the pool will be excluded, (2) insurers participating in the pool will provide continuity of flood insurance coverage by the pool, and (3) other insurance companies, agents, and brokers will to the maximum extent practicable be permitted to cooperate with the pool as fiscal agents or otherwise on a non-risksharing basis.

Section 1333. Adjustment and payment of claims and judicial review

This section authorizes private insurers participating in the pool to adjust and pay claims for losses and permits any claimant, upon disallowance or partial disallowance of a claim, to institute an action, within 1 year after notice of the disallowance was mailed, in the U.S. district court for the district in which the insured property or the major portion of it was situated. Jurisdiction would be conferred on the district court without regard to the amount in controversy. (Claimants could, of course, also avail themselves of legal remedies in State courts.)

Section 1334. Premium equalization payments

Subsection (a) directs the Secretary to make periodic payments to the pool of insurers in recognition of any reductions made in chargeable

premium rates below estimated risk premium rates in order to provide flood insurance on reasonable terms.

Subsection (b) provides that payments for a share of the claims paid in a given period will be based on the aggregate amount of flood insurance retained by the pool after ceding reinsurance in accordance with section 1335, and will not exceed in any payment period an amount determined by a ratio set out in the bill.

Subject to the limiting terms and conditions of the basic agreement between the Secretary and the pool under section 1332, the Secretary would also be authorized to make payments to the pool for a proportionate amount of appropriate operating costs and allowances on the same ratio basis as is used to determine the sharing of claim payments. Subsection (c) authorizes the Secretary to establish designated payment periods and the methods for determing the sum of premiums paid or payable during such periods.

Section 1335. Reinsurance coverage

This section authorizes the Secretary to negotiate an excess loss agreement with the insurance industry pool whereby claims above a certain limit would be submitted to the Secretary on a portfolio basis and paid by the Federal Government.

Part B-Government Program With Industry Assistance Section 1340. Federal operation of the program

Subsection (a) authorizes the Secretary, after consultation with representatives of the insurance industry and after making a deterinination that the flood insurance program cannot be effectively carried on through the insurance pool, to take the necessary steps to operate the program through the facilities of the Federal Government, and to utilize, to the extent practicable, private insurers, agents, brokers, and adjustment organizations as fiscal agents of the United States. Subsection (b) requires the Secretary, upon determining under subsection (a) that the flood insurance program should be operated through the facilities of the Federal Government (and at least 30 days before implementing the program through such facilities), to submit to the Congress a report giving the reasons and supporting findings for his determination, indicating the extent to which he expects to utilize the insurance industry, and setting forth his recommendations.

Section 1341. Adjustment and payment of claims and judicial review

This section authorizes the Secretary to adjust and pay claims in the event the program is being carried out through the facilities of the Federal Government, and authorizes any claimant, upon disallowance or partial disallowance of a claim, to institute an action, within 1 year after the notice of disallowance was mailed, in the U.S. district court for the district in which the insured property or the major portion of it was situated. Jurisdiction would be conferred on the district court without regard to the amount in controversy.

Part C-Provisions of General Applicability

Section 1345. Services by insurance industry

Subsection (a) authorizes the Secretary to enter into the necessary arrangements with the private insurance industry in order to imple

ment the flood insurance program, including provisions for payment of applicable operating costs and allowances for the industry's facilities and services.

Subsection (b) exempts any such arrangement from the provisions of Federal law requiring competitive bids or requiring that contracts for purchases of supplies or services by the Federal Government be made only after advertisement for bids.

Section 1346. Use of insurance pool, companies, or other private organizations for certain payments

Subsections (a), (b), and (d) authorize the Secretary, in order to achieve maximum efficiency in the administration of the flood insurance program, to enter into contracts with the pool, an insurance company, or any other private organization he finds acceptable to assume certain responsibilities on a reimbursement basis, including (1) estimating and determining amounts of Federal payments, (2) receiving from the Secretary, disbursing, and accounting for funds in making such payments, and (3) auditing participating insurers, agents, brokers, or adjustment organizations, as may be necessary to assure that proper payments are made.

Subsection (c) exempts any such contract from the provisions of Federal law requiring competitive bids or requiring that contracts or purchases of supplies or services by the Federal Government be made only after advertisement for bids.

Subsection (e) authorizes the Secretary to require a surety bond from the pool or any company or organization performing such responsibilities and any of its officers and employees. No individual designated to certify payments, or officer disbursing funds in accordance with a proper certification of payments, would be liable with respect to such payments in the absence of gross negligence or intent to defraud the United States.

Subsection (f) makes such contracts automatically renewable from year to year in the absence of notice from either party as to termination, except that the Secretary may terminate a contract after reasonable notice if he determines that the other party has substantially failed in its obligations or is carrying them out in a manner inconsistent with the efficient and effective administration of the flood insurance program.

Section 1347. Settlement and arbitration

This section authorizes the Secretary to make final determination and settlement of any claims arising from financial transactions he is authorized to carry out, and to refer any disputes to arbitration, which would be advisory in nature.

Section 1348. Records and audits

Subsection (a) requires the industry pool and any company or organization entering into a contract, agreement, or arrangement with the Secretary to keep such records as the Secretary may prescribe (including records to facilitate an effective audit and records fully disclosing its total costs under the program).

Subsection (b) requires that the Secretary and the U.S. Comptroller General (and their duly authorized representatives) be given access for audit and examination purposes to the pertinent records of the pool and any such company or organization.

Chapter III-Coordination of Flood Insurance With Land-Management Programs in Flood-Prone Areas

Section 1360. Identification of flood-prone areas

This section authorizes the Secretary, utilizing the Army Corps of Engineers, the Geological Survey, the Soil Conservation Service, the Environmental Science Services Administration, TVA, and other Federal, State, or local agencies, through contract with any persons or private firms, to identify and publish information within 5 years after the enactment with respect to all flood plain areas, including coastal areas in the United States, which have special flood hazards; and, within 15 years, to establish flood risk zones in such areas and to make estimates with respect to the rates of probable flood-caused loss for the various flood risk zones for each of these areas.

Section 1361. Criteria for land management and use

Subsections (a) and (b) authorize the Secretary to carry out studies and investigations with regard to the adequacy of State and local measures in flood-prone areas as to land management and use, flood control, flood zoning, and flood damage prevention. These studies and investigations will (among other things) deal with laws, regulations, or ordinances relating to encroachments and obstructions on stream channels and floodways, the orderly development and use of flood plains of rivers or streams, floodway encroachment lines, flood plain zoning, building codes, building permits, and subdivision or other building restrictions.

Subsection (c) directs the Secretary, on the basis of these studies and investigations, to develop comprehensive criteria designed to encourage, where necessary, the adoption of permanent State or local measures which will lessen the exposure of property and facilities to flood losses, improve the long-range land management and use of floodprone areas, and inhibit, to the maximum extent feasible, unplanned and economically unjustifiable future development in such areas. The Secretary would also work closely with and provide any necessary technical assistance to State, interstate, and local governmental agencies to encourage the application of such criteria and the adoption and enforcement of such measures as may be necessary to help in reducing any unnecessary damages resulting from floods.

Section 1362. Purchase of certain insured properties

This section authorizes the Secretary to negotiate with owners of real property, located in any flood-risk area, which was damaged substantially beyond repair by flood while covered by insurance under the program, for the purchase of such property for subsequent transfer to State or local agencies which agree to use the property for at least 40 years for only such purposes as the Secretary may, by regulation, determine to be consistent with sound land management and use. No property owners would be required to sell their properties under this

section.

Chapter IV-Appropriations and Miscellaneous Provisions Section 1370. Definitions

This section contains definitions of the basic terms used in the title. Under these definitions (1) "flood" has such meaning as may be