A bill to amend the Robert T. Stafford Disaster Relief and Emergency Assistance Act to specify procedures for the conduct of preliminary damage assessments, to direct the Secretary of Homeland Security to vigorously investigate and prosecute instances of fraud, including fraud in the handling and approval of claims for Federal emergency assistance, and for other purposes.

Summary: Amends the Robert T. Stafford Disaster Relielf and Emergency Assistance Act to: (1) specify procedures for the conduct of preliminary disaster damage assessments; and (2) increase the associated penalties for fraud.

Directs the President to: (1) investigate vigorously any allegations and instances of fraud, including fraud relating to the handling and approval of claims for federal emergency assistance; and (2) refer to the Attorney General appropriate allegations, instances, and investigation results.

Requires the Attorney General to: (1) give serious consideration to any allegation or instance of fraud and begin an investigation into it not later than 10 days after the receipt of such a referral; and (2) report on investigation progress and results to the Secretary of Homeland Security within 45 days.

Requires the Director of the Federal Emergency Management Agency to propose new inspection procedures that: (1) more accurately identify disaster-related losses of household items for which applicants should be compensated; (2) modify guidelines for individual and housing inspections to require inspectors to specify any item that was not available for inspection; and (3) develop eligibility criteria for funding vehicle damage, taking into consideration damage to a vehicle sustained as a result of a disaster.

SECTION 1. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds that--
            (1) in the aftermath of the 4 hurricanes that occurred 
        within 6 weeks in the southeast United States during 2004, many 
        of the inspectors and managers employed to inspect and document 
        disaster-related damage in that area had criminal records;
            (2) preliminary damage assessments provide important 
        information about the impact and magnitude of damage and the 
        needs of individuals, businesses, the public sector, and the 
        community as a whole; and
            (3) the failure to conduct a preliminary damage assessment 
        can result in Federal funds being provided to areas that have 
        not suffered the level of damage that would qualify an area for 
        Federal disaster assistance.
    (b) Purposes.--The purposes of this Act are--
            (1) to ensure the appropriate use of public funds;
            (2) to protect disaster victims; and
            (3) to require more stringent background checks for 
        contractors of the Federal Emergency Management Agency.

SEC. 2. PRELIMINARY DAMAGE ASSESSMENTS.

    Section 401 of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5170) is amended--
            (1) by striking ``All requests for'' and inserting the 
        following:
    ``(a) In General.--All requests for''; and
            (2) by adding at the end the following:
    ``(b) Preliminary Damage Assessments.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Assessment.--The term `assessment' means a 
                preliminary damage assessment described in paragraph 
                (2)(A).
                    ``(B) Director.--The term `Director' means the 
                Director of FEMA.
                    ``(C) FEMA.--The term `FEMA' means the Federal 
                Emergency Management Agency.
                    ``(D) Incident.--The term `incident' means a 
                condition or occurrence that causes such damage or 
                hardship as may result in a Presidential declaration of 
                a major disaster or emergency.
                    ``(E) Secretary.--The term `Secretary' means the 
                Secretary of Homeland Security, acting through the 
                Director.
            ``(2) Preliminary damage assessment.--
                    ``(A) Preassessment by the state.--Except as 
                provided in subparagraph (E), on occurrence of an 
                incident, or if a State determines that the occurrence 
                of an incident is imminent, and the State official 
                responsible for disaster operations determines that the 
                State and local governments may lack the capability to 
                adequately respond to the incident, the State shall--
                            ``(i) verify the information of the State 
                        used to make the determination; and
                            ``(ii) request the Regional Director to 
                        perform a joint FEMA-State preliminary damage 
                        assessment of the type, extent, and location of 
                        any damage caused by the incident.
                    ``(B) Damage assessment teams.--Each State shall 
                appoint a damage assessment team to carry out 
                assessments described in subparagraph (A) that is 
                composed of--
                            ``(i) at least 1 representative of the 
                        Federal Government;
                            ``(ii) a least 1 representative of the 
                        State;
                            ``(iii) if practicable, a local government 
                        representative who is familiar with the extent 
                        and location of damage or potential damage in 
                        any applicable communities; and
                            ``(iv) such additional representatives from 
                        Federal and State agencies and voluntary relief 
                        organizations as are necessary, as determined 
                        by the State.
                    ``(C) Responsibility of state.--A State shall 
                assume responsibility for--
                            ``(i) coordination of State and local 
                        participation in an assessment conducted under 
                        this paragraph; and
                            ``(ii) ensuring that participants in the 
                        assessment receive timely notification 
                        concerning the schedule of activities for the 
                        assessment.
                    ``(D) Responsibility of fema.--The Secretary shall 
                designate an official of FEMA--
                            ``(i) to brief members of the assessment 
                        team on--
                                    ``(I) damage criteria;
                                    ``(II) the kind of information to 
                                be collected for the particular 
                                incident that is the subject of the 
                                assessment; and
                                    ``(III) applicable reporting 
                                requirements; and
                            ``(ii) on completion of the assessment, to 
                        consult with State officials to discuss 
                        findings and reconcile any differences.
                    ``(E) Waiver.--
                            ``(i) In general.--The State, in 
                        consultation with the Regional Director or 
                        FEMA, may elect not to carry out an 
                        assessment--
                                    ``(I) in the case of an incident of 
                                unusual severity and magnitude that 
                                does not require any field damage 
                                assessments to determine the need for 
                                supplemental Federal assistance under 
                                this Act; or
                                    ``(II) in other appropriate cases, 
                                as determined by the State, in 
                                consultation with the Regional Director 
                                of FEMA.
                            ``(ii) Managerial response.--Nothing in 
                        this subparagraph prevents the conduct of an 
                        assessment to determine unmet needs for 
                        managerial response purposes.''.

SEC. 3. FRAUD.

    (a) Penalties.--Section 314(d) of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (42 U.S.C. 5157(d)) is amended by 
striking ``$5,000'' and inserting ``$10,000''.
    (b) Fraud Investigations.--Section 318 of the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act (42 U.S.C. 5161) is 
amended by adding at the end the following:
    ``(d) Fraud Investigations.--
            ``(1) In general.--The President shall--
                    ``(A) vigorously investigate allegations and 
                instances of fraud under this Act, including fraud 
                relating to the handling and approval of claims for 
                Federal emergency assistance; and
                    ``(B) refer to the Attorney General of the United 
                States, in accordance with section 314(c), such 
                allegations, instances, and results of investigations 
                described in subparagraph (A) as the President 
                determines to be appropriate.
            ``(2) Attorney general.--The Attorney General of the United 
        States shall--
                    ``(A) give serious consideration to any allegations 
                or instances of fraud referred under paragraph (1)(B);
                    ``(B) not later than 10 days after the date of 
                receipt of such a referral, begin an investigation into 
                the allegation; and
                    ``(C) not later than 45 days after the date of 
                receipt of the referral, submit to the Secretary of 
                Homeland Security a report describing the progress and 
                results of the investigation.
            ``(3) Federal emergency management agency.--
                    ``(A) Procedures and guidelines.--Not later than 
                120 days after the date of enactment of this 
                subsection, the Director of the Federal Emergency 
                Management Agency (referred to in this paragraph as the 
                `Director') shall--
                            ``(i) propose new inspection procedures 
                        that more accurately identify disaster-related 
                        losses of household items for which applicants 
                        should be compensated;
                            ``(ii) modify guidelines relating to 
                        individual and housing inspections to require 
                        inspectors to specify any item that was not 
                        available for inspection;
                            ``(iii) develop eligibility criteria for 
                        funding vehicle damage, taking into 
                        consideration damage to a vehicle sustained as 
                        a result of a disaster;
                            ``(iv) propose new inspection guidelines 
                        that prohibit inspectors from entering into a 
                        contract with any individual or entity for whom 
                        the inspector performs an inspection for 
                        purposes of determining eligibility for 
                        assistance from the Federal Emergency 
                        Management Agency;
                            ``(v) modify guidelines to require contract 
                        inspectors to--
                                    ``(I) document vehicle damage to 
                                allow the Director to justify an award 
                                based on disaster-related need; and
                                    ``(II) base any funding 
                                recommendation of the contract 
                                inspector for miscellaneous items on 
                                disaster-related need;
                            ``(vi) modify guidelines to establish a 
                        reasonable replacement value for destroyed 
                        vehicles, as determined by the Director, taking 
                        into consideration the cost of acquiring a 
                        comparable vehicle;
                            ``(vii) develop criteria and guidelines for 
                        defining the term `disaster-related death', 
                        including a requirement that an employee of the 
                        Federal Emergency Management Agency document 
                        each request for funeral expenses assistance in 
                        order to support the approval or disapproval of 
                        the assistance;
                            ``(viii) modify home inspection procedures 
                        to require contract inspectors to document--
                                    ``(I) any reason why the contractor 
                                determined a home was unsafe; and
                                    ``(II) any instance of deferred 
                                maintenance, including an evaluation of 
                                the severity of housing conditions;
                            ``(ix) modify inspection guidelines for 
                        repair and replacement of homes to require 
                        inspectors to justify a determination that a 
                        home is destroyed by identifying and 
                        documenting each type of damage sustained by 
                        the home; and
                            ``(x) review and modify each inspection 
                        contract to require contractors to--
                                    ``(I) review the quality of work of 
                                an inspector before submitting 
                                inspection data to the Director;
                                    ``(II) certify the independence of 
                                the contractor during each inspection;
                                    ``(III) recuse themselves from any 
                                inspections that present a possible 
                                conflict of interest; and
                                    ``(IV) consent to a criminal 
                                background check in accordance with 
                                subparagraph (B).
                    ``(B) Report.--Not later than 180 days after the 
                Director develops procedures and guidelines under 
                subparagraph (A), the Director shall submit to the 
                Committee on Homeland Security and Governmental Affairs 
                of the Senate and the Committee on Transportation and 
                Infrastructure of the House of Representatives a report 
                that describes any change to the procedures and 
                guidelines of the Federal Emergency Management Agency.
                    ``(C) Background checks.--The Director shall 
                include in any contract with an inspector the 
                requirements that--
                            ``(i) a background check shall be performed 
                        on the inspector;
                            ``(ii) the results of the background check 
                        shall be submitted to the Director not later 
                        than 7 days after the date on which the 
                        inspector is hired by the Director; and
                            ``(iii) an inspector who has been convicted 
                        of criminal misconduct (including fraud, 
                        robbery, burglary, forgery, and felony drug 
                        possession) shall not be employed by the 
                        Federal Emergency Management Agency as an 
                        inspector.''.