108 STAT. 2268 PUBLIC LAW 103-325—SEPT. 23, 1994 "FLOOD INSURANCE PURCHASE AND COMPLIANCE REQUIREMENTS AND ESCROW ACCOUNTS". Subtitle C—Ratings and Incentives for Community Floodplain Management Programs SEC. 541. COMMUNITY RATING SYSTEM AND INCENTIVES FOR COMMU- NITY FLOODPLAIN MANAGEMENT. Section 1315 of the National Flood Insurance Act of 1968 (42 U.S.C. 4022) is amended— (1) by striking "After December" and inserting the following: "(a) REQUIREMENT FOR PARTICIPATION IN FLOOD INSURANCE PROGRAM.— "(1) IN GENERAL. —After December"; and (2) by adding at the end the following new subsection: "(b) COMMUNITY RATING SYSTEM AND INCENTIVES FOR COMMU- NITY FLOODPLAIN MANAGEMENT. — "(1) AUTHORITY AND GOALS. — The Director shall carry out a community rating system program, under which communities participate voluntarily— "(A) to provide incentives for measures that reduce the risk of flood or erosion damage that exceed the criteria set forth in section 1361 and evaluate such measures; "(B) to encourage adoption of more effective measures that protect natural and beneficial floodplain functions; "(C) to encourage floodplain and erosion management; and "(D) to promote the reduction of Federal flood insurance losses. "(2) INCENTIVES.— The program shall provide incentives in the form of credits on premium rates for flood insurance coverage in communities that the Director determines have adopted and enforced measures that reduce the risk of flood and erosion damage that exceed the criteria set forth in section 1361. In providing incentives under this paragraph, the Director may provide for credits to flood insurance premium rates in communities that the Director determines have implemented measures that protect natural and beneficial floodplain functions. "(3) CREDITS.—The credits on premium rates for flood insurance coverage shall be based on the estimated reduction in flood and erosion damage risks resulting from the measures adopted by the community under this program. If a community has received mitigation assistance under section 1366, the credits shall be phased in a manner, determined by the Director, to recover the amount of such assistance provided for the community. "(4) REPORTS.— Not later than 2 years after the date of enactment of the Riegle Community Development and Regulatory Improvement Act of 1994 and not less than every 2 years thereafter, the Director shall submit a report to the Congress regarding the program under this subsection. Each report shall include an analysis of the cost-effectiveness of
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