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[107th Congress Public Law 297]
[From the U.S. Government Printing Office]

<DOC>
[DOCID: f:publ297.107]

[[Page 2321]]

                  TERRORISM RISK INSURANCE ACT OF 2002

[[Page 116 STAT. 2322]]

Public Law 107-297
107th Congress

                                 An Act

 
   To ensure the continued financial capacity of insurers to provide 
   coverage for risks from terrorism. <<NOTE: Nov. 26, 2002 -  [H.R. 
                                3210]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress <<NOTE: Terrorism Risk Insurance 
Act of 2002.>> assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short <<NOTE: 15 USC 6701 note.>> Title.--This Act may be cited 
as the ``Terrorism Risk Insurance Act of 2002''.

    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

                  TITLE I--TERRORISM INSURANCE PROGRAM

Sec. 101. Congressional findings and purpose.
Sec. 102. Definitions.
Sec. 103. Terrorism Insurance Program.
Sec. 104. General authority and administration of claims.
Sec. 105. Preemption and nullification of pre-existing terrorism 
           exclusions.
Sec. 106. Preservation provisions.
Sec. 107. Litigation management.
Sec. 108. Termination of Program.

                 TITLE II--TREATMENT OF TERRORIST ASSETS

Sec. 201. Satisfaction of judgments from blocked assets of terrorists, 
           terrorist organizations, and State sponsors of terrorism.

               TITLE III--FEDERAL RESERVE BOARD PROVISIONS

Sec. 301. Certain authority of the Board of Governors of the Federal 
           Reserve System.

TITLE I--TERRORISM <<NOTE: 15 USC 6701 note.>> INSURANCE PROGRAM

SEC. 101. CONGRESSIONAL FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds that--
            (1) the ability of businesses and individuals to obtain 
        property and casualty insurance at reasonable and predictable 
        prices, in order to spread the risk of both routine and 
        catastrophic loss, is critical to economic growth, urban 
        development, and the construction and maintenance of public and 
        private housing, as well as to the promotion of United States 
        exports and foreign trade in an increasingly interconnected 
        world;
            (2) property and casualty insurance firms are important 
        financial institutions, the products of which allow 
        mutualization of risk and the efficient use of financial 
        resources and enhance

[[Page 116 STAT. 2323]]

        the ability of the economy to maintain stability, while 
        responding to a variety of economic, political, environmental, 
        and other risks with a minimum of disruption;
            (3) the ability of the insurance industry to cover the 
        unprecedented financial risks presented by potential acts of 
        terrorism in the United States can be a major factor in the 
        recovery from terrorist attacks, while maintaining the stability 
        of the economy;
            (4) widespread financial market uncertainties have arisen 
        following the terrorist attacks of September 11, 2001, including 
        the absence of information from which financial institutions can 
        make statistically valid estimates of the probability and cost 
        of future terrorist events, and therefore the size, funding, and 
        allocation of the risk of loss caused by such acts of terrorism;
            (5) a decision by property and casualty insurers to deal 
        with such uncertainties, either by terminating property and 
        casualty coverage for losses arising from terrorist events, or 
        by radically escalating premium coverage to compensate for risks 
        of loss that are not readily predictable, could seriously hamper 
        ongoing and planned construction, property acquisition, and 
        other business projects, generate a dramatic increase in rents, 
        and otherwise suppress economic activity; and
            (6) the United States Government should provide temporary 
        financial compensation to insured parties, contributing to the 
        stabilization of the United States economy in a time of national 
        crisis, while the financial services industry develops the 
        systems, mechanisms, products, and programs necessary to create 
        a viable financial services market for private terrorism risk 
        insurance.

    (b) Purpose.--The purpose of this title is to establish a temporary 
Federal program that provides for a transparent system of shared public 
and private compensation for insured losses resulting from acts of 
terrorism, in order to--
            (1) protect consumers by addressing market disruptions and 
        ensure the continued widespread availability and affordability 
        of property and casualty insurance for terrorism risk; and
            (2) allow for a transitional period for the private markets 
        to stabilize, resume pricing of such insurance, and build 
        capacity to absorb any future losses, while preserving State 
        insurance regulation and consumer protections.

SEC. 102. DEFINITIONS.

    In this title, the following definitions shall apply:
            (1) Act of terrorism.--
                    (A) Certification.--The term ``act of terrorism'' 
                means any act that is certified by the Secretary, in 
                concurrence with the Secretary of State, and the 
                Attorney General of the United States--
                          (i) to be an act of terrorism;
                          (ii) to be a violent act or an act that is 
                      dangerous to--
                                    (I) human life;
                                    (II) property; or
                                    (III) infrastructure;

[[Page 116 STAT. 2324]]

                          (iii) to have resulted in damage within the 
                      United States, or outside of the United States in 
                      the case of--
                                    (I) an air carrier or vessel 
                                described in paragraph (5)(B); or
                                    (II) the premises of a United States 
                                mission; and
                          (iv) to have been committed by an individual 
                      or individuals acting on behalf of any foreign 
                      person or foreign interest, as part of an effort 
                      to coerce the civilian population of the United 
                      States or to influence the policy or affect the 
                      conduct of the United States Government by 
                      coercion.
                    (B) Limitation.--No act shall be certified by the 
                Secretary as an act of terrorism if--
                          (i) the act is committed as part of the course 
                      of a war declared by the Congress, except that 
                      this clause shall not apply with respect to any 
                      coverage for workers' compensation; or
                          (ii) property and casualty insurance losses 
                      resulting from the act, in the aggregate, do not 
                      exceed $5,000,000.
                    (C) Determinations final.--Any certification of, or 
                determination not to certify, an act as an act of 
                terrorism under this paragraph shall be final, and shall 
                not be subject to judicial review.
                    (D) Nondelegation.--The Secretary may not delegate 
                or designate to any other officer, employee, or person, 
                any determination under this paragraph of whether, 
                during the effective period of the Program, an act of 
                terrorism has occurred.
            (2) Affiliate.--The term ``affiliate'' means, with respect 
        to an insurer, any entity that controls, is controlled by, or is 
        under common control with the insurer.
            (3) Control.--An entity has ``control'' over another entity, 
        if--
                    (A) the entity directly or indirectly or acting 
                through 1 or more other persons owns, controls, or has 
                power to vote 25 percent or more of any class of voting 
                securities of the other entity;
                    (B) the entity controls in any manner the election 
                of a majority of the directors or trustees of the other 
                entity; or
                    (C) the Secretary determines, after notice and 
                opportunity for hearing, that the entity directly or 
                indirectly exercises a controlling influence over the 
                management or policies of the other entity.
            (4) Direct earned premium.--The term ``direct earned 
        premium'' means a direct earned premium for property and 
        casualty insurance issued by any insurer for insurance against 
        losses occurring at the locations described in subparagraphs (A) 
        and (B) of paragraph (5).
            (5) Insured loss.--The term ``insured loss'' means any loss 
        resulting from an act of terrorism (including an act of war, in 
        the case of workers' compensation) that is covered by primary or 
        excess property and casualty insurance issued by an insurer if 
        such loss--

[[Page 116 STAT. 2325]]

                    (A) occurs within the United States; or
                    (B) occurs to an air carrier (as defined in section 
                40102 of title 49, United States Code), to a United 
                States flag vessel (or a vessel based principally in the 
                United States, on which United States income tax is paid 
                and whose insurance coverage is subject to regulation in 
                the United States), regardless of where the loss occurs, 
                or at the premises of any United States mission.
            (6) Insurer.--The term ``insurer'' means any entity, 
        including any affiliate thereof--
                    (A) that is--
                          (i) licensed or admitted to engage in the 
                      business of providing primary or excess insurance 
                      in any State;
                          (ii) not licensed or admitted as described in 
                      clause (i), if it is an eligible surplus line 
                      carrier listed on the Quarterly Listing of Alien 
                      Insurers of the NAIC, or any successor thereto;
                          (iii) approved for the purpose of offering 
                      property and casualty insurance by a Federal 
                      agency in connection with maritime, energy, or 
                      aviation activity;
                          (iv) a State residual market insurance entity 
                      or State workers' compensation fund; or
                          (v) any other entity described in section 
                      103(f), to the extent provided in the rules of the 
                      Secretary issued under section 103(f);
                    (B) that receives direct earned premiums for any 
                type of commercial property and casualty insurance 
                coverage, other than in the case of entities described 
                in sections 103(d) and 103(f); and
                    (C) that meets any other criteria that the Secretary 
                may reasonably prescribe.
            (7) Insurer deductible.--The term ``insurer deductible'' 
        means--
                    (A) for the Transition Period, the value of an 
                insurer's direct earned premiums over the calendar year 
                immediately preceding the date of enactment of this Act, 
                multiplied by 1 percent;
                    (B) for Program Year 1, the value of an insurer's 
                direct earned premiums over the calendar year 
                immediately preceding Program Year 1, multiplied by 7 
                percent;
                    (C) for Program Year 2, the value of an insurer's 
                direct earned premiums over the calendar year 
                immediately preceding Program Year 2, multiplied by 10 
                percent;
                    (D) for Program Year 3, the value of an insurer's 
                direct earned premiums over the calendar year 
                immediately preceding Program Year 3, multiplied by 15 
                percent; and
                    (E) notwithstanding subparagraphs (A) through (D), 
                for the Transition Period, Program Year 1, Program Year 
                2, or Program Year 3, if an insurer has not had a full 
                year of operations during the calendar year immediately 
                preceding such Period or Program Year, such portion of 
                the direct earned premiums of the insurer as the 
                Secretary determines appropriate, subject to appropriate 
                methodologies established by the Secretary for measuring 
                such direct earned premiums.
            (8) NAIC.--The term ``NAIC'' means the National Association 
        of Insurance Commissioners.

[[Page 116 STAT. 2326]]

            (9) Person.--The term ``person'' means any individual, 
        business or nonprofit entity (including those organized in the 
        form of a partnership, limited liability company, corporation, 
        or association), trust or estate, or a State or political 
        subdivision of a State or other governmental unit.
            (10) Program.--The term ``Program'' means the Terrorism 
        Insurance Program established by this title.
            (11) Program years.--
                    (A) Transition period.--The term ``Transition 
                Period'' means the period beginning on the date of 
                enactment of this Act and ending on December 31, 2002.
                    (B) Program year 1.--The term ``Program Year 1'' 
                means the period beginning on January 1, 2003 and ending 
                on December 31, 2003.
                    (C) Program year 2.--The term ``Program Year 2'' 
                means the period beginning on January 1, 2004 and ending 
                on December 31, 2004.
                    (D) Program year 3.--The term ``Program Year 3'' 
                means the period beginning on January 1, 2005 and ending 
                on December 31, 2005.
            (12) Property and casualty insurance.--The term ``property 
        and casualty insurance''--
                    (A) means commercial lines of property and casualty 
                insurance, including excess insurance, workers' 
                compensation insurance, and surety insurance; and
                    (B) does not include--
                          (i) Federal crop insurance issued or reinsured 
                      under the Federal Crop Insurance Act (7 U.S.C. 
                      1501 et seq.), or any other type of crop or 
                      livestock insurance that is privately issued or 
                      reinsured;
                          (ii) private mortgage insurance (as that term 
                      is defined in section 2 of the Homeowners 
                      Protection Act of 1998 (12 U.S.C. 4901)) or title 
                      insurance;
                          (iii) financial guaranty insurance issued by 
                      monoline financial guaranty insurance 
                      corporations;
                          (iv) insurance for medical malpractice;
                          (v) health or life insurance, including group 
                      life insurance;
                          (vi) flood insurance provided under the 
                      National Flood Insurance Act of 1968 (42 U.S.C. 
                      4001 et seq.); or
                          (vii) reinsurance or retrocessional 
                      reinsurance.
            (13) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.
            (14) State.--The term ``State'' means any State of the 
        United States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Commonwealth of the Northern Mariana Islands, 
        American Samoa, Guam, each of the United States Virgin Islands, 
        and any territory or possession of the United States.
            (15) United states.--The term ``United States'' means the 
        several States, and includes the territorial sea and the 
        continental shelf of the United States, as those terms are 
        defined in the Violent Crime Control and Law Enforcement Act of 
        1994 (18 U.S.C. 2280, 2281).

[[Page 116 STAT. 2327]]

            (16) Rule of construction for dates.--With respect to any 
        reference to a date in this title, such day shall be construed--
                    (A) to begin at 12:01 a.m. on that date; and
                    (B) to end at midnight on that date.

SEC. 103. TERRORISM INSURANCE PROGRAM.

    (a) Establishment of Program.--
            (1) In general.--There is established in the Department of 
        the Treasury the Terrorism Insurance Program.
            (2) Authority of the secretary.--Notwithstanding any other 
        provision of State or Federal law, the Secretary shall 
        administer the Program, and shall pay the Federal share of 
        compensation for insured losses in accordance with subsection 
        (e).
            (3) Mandatory participation.--Each entity that meets the 
        definition of an insurer under this title shall participate in 
        the Program.

    (b) Conditions for Federal Payments.--No payment may be made by the 
Secretary under this section with respect to an insured loss that is 
covered by an insurer, unless--
            (1) the person that suffers the insured loss, or a person 
        acting on behalf of that person, files a claim with the insurer;
            (2) the insurer provides clear and conspicuous disclosure to 
        the policyholder of the premium charged for insured losses 
        covered by the Program and the Federal share of compensation for 
        insured losses under the Program--
                    (A) <<NOTE: Deadline.>> in the case of any policy 
                that is issued before the date of enactment of this Act, 
                not later than 90 days after that date of enactment;
                    (B) in the case of any policy that is issued within 
                90 days of the date of enactment of this Act, at the 
                time of offer, purchase, and renewal of the policy; and
                    (C) in the case of any policy that is issued more 
                than 90 days after the date of enactment of this Act, on 
                a separate line item in the policy, at the time of 
                offer, purchase, and renewal of the policy;
            (3) the insurer processes the claim for the insured loss in 
        accordance with appropriate business practices, and any 
        reasonable procedures that the Secretary may prescribe; and
            (4) the insurer submits to the Secretary, in accordance with 
        such reasonable procedures as the Secretary may establish--
                    (A) a claim for payment of the Federal share of 
                compensation for insured losses under the Program;
                    (B) written certification--
                          (i) of the underlying claim; and
                          (ii) of all payments made for insured losses; 
                      and
                    (C) certification of its compliance with the 
                provisions of this subsection.

    (c) Mandatory Availability.--
            (1) Initial program periods.--During the period beginning on 
        the first day of the Transition Period and ending on the last 
        day of Program Year 2, each entity that meets the definition of 
        an insurer under section 102--

[[Page 116 STAT. 2328]]

                    (A) shall make available, in all of its property and 
                casualty insurance policies, coverage for insured 
                losses; and
                    (B) shall make available property and casualty 
                insurance coverage for insured losses that does not 
                differ materially from the terms, amounts, and other 
                coverage limitations applicable to losses arising from 
                events other than acts of terrorism.
            (2) Program <<NOTE: Deadline.>> year 3.--Not later than 
        September 1, 2004, the Secretary shall, based on the factors 
        referred to in section 108(d)(1), determine whether the 
        provisions of subparagraphs (A) and (B) of paragraph (1) should 
        be extended through Program Year 3.

    (d) State Residual Market Insurance Entities.--
            (1) In <<NOTE: Regulations.>> general.--The Secretary shall 
        issue regulations, as soon as practicable after the date of 
        enactment of this Act, that apply the provisions of this title 
        to State residual market insurance entities and State workers' 
        compensation funds.
            (2) Treatment of certain entities.--For purposes of the 
        regulations issued pursuant to paragraph (1)--
                    (A) a State residual market insurance entity that 
                does not share its profits and losses with private 
                sector insurers shall be treated as a separate insurer; 
                and
                    (B) a State residual market insurance entity that 
                shares its profits and losses with private sector 
                insurers shall not be treated as a separate insurer, and 
                shall report to each private sector insurance 
                participant its share of the insured losses of the 
                entity, which shall be included in each private sector 
                insurer's insured losses.
            (3) Treatment of participation in certain entities.--Any 
        insurer that participates in sharing profits and losses of a 
        State residual market insurance entity shall include in its 
        calculations of premiums any premiums distributed to the insurer 
        by the State residual market insurance entity.

    (e) Insured Loss Shared Compensation.--
            (1) Federal share.--
                    (A) In general.--The Federal share of compensation 
                under the Program to be paid by the Secretary for 
                insured losses of an insurer during the Transition 
                Period and each Program Year shall be equal to 90 
                percent of that portion of the amount of such insured 
                losses that exceeds the applicable insurer deductible 
                required to be paid during such Transition Period or 
                such Program Year.
                    (B) Prohibition on duplicative compensation.--The 
                Federal share of compensation for insured losses under 
                the Program shall be reduced by the amount of 
                compensation provided by the Federal Government to any 
                person under any other Federal program for those insured 
                losses.
            (2) Cap on annual liability.--
                    (A) In general.--Notwithstanding paragraph (1) or 
                any other provision of Federal or State law, if the 
                aggregate insured losses exceed $100,000,000,000, during 
                the period beginning on the first day of the Transition 
                Period and ending on the last day of Program Year 1, or 
                during Program Year 2 or Program Year 3 (until such time 
                as the Congress may act otherwise with respect to such 
                losses)--

[[Page 116 STAT. 2329]]

                          (i) the Secretary shall not make any payment 
                      under this title for any portion of the amount of 
                      such losses that exceeds $100,000,000,000; and
                          (ii) no insurer that has met its insurer 
                      deductible shall be liable for the payment of any 
                      portion of that amount that exceeds 
                      $100,000,000,000.
                    (B) Insurer share.--For purposes of subparagraph 
                (A), the Secretary shall determine the pro rata share of 
                insured losses to be paid by each insurer that incurs 
                insured losses under the Program.
            (3) Notice to congress.--The Secretary shall notify the 
        Congress if estimated or actual aggregate insured losses exceed 
        $100,000,000,000 during the period beginning on the first day of 
        the Transition Period and ending on the last day of Program Year 
        1, or during Program Year 2 or Program Year 3, and the Congress 
        shall determine the procedures for and the source of any 
        payments for such excess insured losses.
            (4) Final netting.--The Secretary shall have sole discretion 
        to determine the time at which claims relating to any insured 
        loss or act of terrorism shall become final.
            (5) Determinations final.--Any determination of the 
        Secretary under this subsection shall be final, unless expressly 
        provided, and shall not be subject to judicial review.
            (6) Insurance marketplace aggregate retention amount.--For 
        purposes of paragraph (7), the insurance marketplace aggregate 
        retention amount shall be--
                    (A) for the period beginning on the first day of the 
                Transition Period and ending on the last day of Program 
                Year 1, the lesser of--
                          (i) $10,000,000,000; and
                          (ii) the aggregate amount, for all insurers, 
                      of insured losses during such period;
                    (B) for Program Year 2, the lesser of--
                          (i) $12,500,000,000; and
                          (ii) the aggregate amount, for all insurers, 
                      of insured losses during such Program Year; and
                    (C) for Program Year 3, the lesser of--
                          (i) $15,000,000,000; and
                          (ii) the aggregate amount, for all insurers, 
                      of insured losses during such Program Year.
            (7) Recoupment of federal share.--
                    (A) Mandatory recoupment amount.--For purposes of 
                this paragraph, the mandatory recoupment amount for each 
                of the periods referred to in subparagraphs (A), (B), 
                and (C) of paragraph (6) shall be the difference 
                between--
                          (i) the insurance marketplace aggregate 
                      retention amount under paragraph (6) for such 
                      period; and
                          (ii) the aggregate amount, for all insurers, 
                      of insured losses during such period that are not 
                      compensated by the Federal Government because such 
                      losses--
                                    (I) are within the insurer 
                                deductible for the insurer subject to 
                                the losses; or
                                    (II) are within the portion of 
                                losses of the insurer that exceed the 
                                insurer deductible, but are not 
                                compensated pursuant to paragraph (1).

[[Page 116 STAT. 2330]]

                    (B) No mandatory recoupment if uncompensated losses 
                exceed insurance marketplace retention.--Notwithstanding 
                subparagraph (A), if the aggregate amount of 
                uncompensated insured losses referred to in clause (ii) 
                of such subparagraph for any period referred to in 
                subparagraph (A), (B), or (C) of paragraph (6) is 
                greater than the insurance marketplace aggregate 
                retention amount under paragraph (6) for such period, 
                the mandatory recoupment amount shall be $0.
                    (C) Mandatory establishment of surcharges to recoup 
                mandatory recoupment amount.--The Secretary shall 
                collect, for repayment of the Federal financial 
                assistance provided in connection with all acts of 
                terrorism (or acts of war, in the case of workers 
                compensation) occurring during any of the periods 
                referred to in subparagraph (A), (B), or (C) of 
                paragraph (6), terrorism loss risk-spreading premiums in 
                an amount equal to any mandatory recoupment amount for 
                such period.
                    (D) Discretionary recoupment of remainder of 
                financial assistance.--To the extent that the amount of 
                Federal financial assistance provided exceeds any 
                mandatory recoupment amount, the Secretary may recoup, 
                through terrorism loss risk-spreading premiums, such 
                additional amounts that the Secretary believes can be 
                recouped, based on--
                          (i) the ultimate costs to taxpayers of no 
                      additional recoupment;
                          (ii) the economic conditions in the commercial 
                      marketplace, including the capitalization, 
                      profitability, and investment returns of the 
                      insurance industry and the current cycle of the 
                      insurance markets;
                          (iii) the affordability of commercial 
                      insurance for small- and medium-sized businesses; 
                      and
                          (iv) such other factors as the Secretary 
                      considers appropriate.
            (8) Policy surcharge for terrorism loss risk-spreading 
        premiums.--
                    (A) Policyholder premium.--Any amount established by 
                the Secretary as a terrorism loss risk-spreading premium 
                shall--
                          (i) be imposed as a policyholder premium 
                      surcharge on property and casualty insurance 
                      policies in force after the date of such 
                      establishment;
                          (ii) begin with such period of coverage during 
                      the year as the Secretary determines appropriate; 
                      and
                          (iii) be based on a percentage of the premium 
                      amount charged for property and casualty insurance 
                      coverage under the policy.
                    (B) Collection.--The Secretary shall provide for 
                insurers to collect terrorism loss risk-spreading 
                premiums and remit such amounts collected to the 
                Secretary.
                    (C) Percentage limitation.--A terrorism loss risk-
                spreading premium (including any additional amount 
                included in such premium on a discretionary basis 
                pursuant to paragraph (7)(D)) may not exceed, on an 
                annual basis, the amount equal to 3 percent of the 
                premium charged

[[Page 116 STAT. 2331]]

                for property and casualty insurance coverage under the 
                policy.
                    (D) Adjustment for urban and smaller commercial and 
                rural areas and different lines of insurance.--
                          (i) Adjustments.--In determining the method 
                      and manner of imposing terrorism loss risk-
                      spreading premiums, including the amount of such 
                      premiums, the Secretary shall take into 
                      consideration--
                                    (I) the economic impact on 
                                commercial centers of urban areas, 
                                including the effect on commercial rents 
                                and commercial insurance premiums, 
                                particularly rents and premiums charged 
                                to small businesses, and the 
                                availability of lease space and 
                                commercial insurance within urban areas;
                                    (II) the risk factors related to 
                                rural areas and smaller commercial 
                                centers, including the potential 
                                exposure to loss and the likely 
                                magnitude of such loss, as well as any 
                                resulting cross-subsidization that might 
                                result; and
                                    (III) the various exposures to 
                                terrorism risk for different lines of 
                                insurance.
                          (ii) Recoupment of adjustments.--Any mandatory 
                      recoupment amounts not collected by the Secretary 
                      because of adjustments under this subparagraph 
                      shall be recouped through additional terrorism 
                      loss risk-spreading premiums.
                    (E) Timing of premiums.--The Secretary may adjust 
                the timing of terrorism loss risk-spreading premiums to 
                provide for equivalent application of the provisions of 
                this title to policies that are not based on a calendar 
                year, or to apply such provisions on a daily, monthly, 
                or quarterly basis, as appropriate.

    (f) Captive Insurers and Other Self-Insurance Arrangements.--The 
Secretary may, in consultation with the NAIC or the appropriate State 
regulatory authority, apply the provisions of this title, as 
appropriate, to other classes or types of captive insurers and other 
self-insurance arrangements by municipalities and other entities (such 
as workers' compensation self-insurance programs and State workers' 
compensation reinsurance pools), but only if such application is 
determined before the occurrence of an act of terrorism in which such an 
entity incurs an insured loss and all of the provisions of this title 
are applied comparably to such entities.
    (g) Reinsurance to Cover Exposure.--
            (1) Obtaining coverage.--This title may not be construed to 
        limit or prevent insurers from obtaining reinsurance coverage 
        for insurer deductibles or insured losses retained by insurers 
        pursuant to this section, nor shall the obtaining of such 
        coverage affect the calculation of such deductibles or 
        retentions.
            (2) Limitation on financial assistance.--The amount of 
        financial assistance provided pursuant to this section shall not 
        be reduced by reinsurance paid or payable to an insurer from 
        other sources, except that recoveries from such other sources, 
        taken together with financial assistance for the Transition 
        Period or a Program Year provided pursuant to this section, may 
        not exceed the aggregate amount of the insurer's insured

[[Page 116 STAT. 2332]]

        losses for such period. If such recoveries and financial 
        assistance for the Transition Period or a Program Year exceed 
        such aggregate amount of insured losses for that period and 
        there is no agreement between the insurer and any reinsurer to 
        the contrary, an amount in excess of such aggregate insured 
        losses shall be returned to the Secretary.

    (h) Group Life Insurance Study.--
            (1) Study.--The Secretary shall study, on an expedited 
        basis, whether adequate and affordable catastrophe reinsurance 
        for acts of terrorism is available to life insurers in the 
        United States that issue group life insurance, and the extent to 
        which the threat of terrorism is reducing the availability of 
        group life insurance coverage for consumers in the United 
        States.
            (2) Conditional Coverage.--To the extent that the Secretary 
        determines that such coverage is not or will not be reasonably 
        available to both such insurers and consumers, the Secretary 
        shall, in consultation with the NAIC--
                    (A) apply the provisions of this title, as 
                appropriate, to providers of group life insurance; and
                    (B) provide such restrictions, limitations, or 
                conditions with respect to any financial assistance 
                provided that the Secretary deems appropriate, based on 
                the study under paragraph (1).

    (i) Study and Report.--
            (1) Study.--The Secretary, after consultation with the NAIC, 
        representatives of the insurance industry, and other experts in 
        the insurance field, shall conduct a study of the potential 
        effects of acts of terrorism on the availability of life 
        insurance and other lines of insurance coverage, including 
        personal lines.
            (2) Report.--Not <<NOTE: Deadline.>> later than 9 months 
        after the date of enactment of this Act, the Secretary shall 
        submit a report to the Congress on the results of the study 
        conducted under paragraph (1).

SEC. 104. GENERAL AUTHORITY AND ADMINISTRATION OF CLAIMS.

    (a) General Authority.--The Secretary shall have the powers and 
authorities necessary to carry out the Program, including authority--
            (1) to investigate and audit all claims under the Program; 
        and
            (2) <<NOTE: Regulations.>> to prescribe regulations and 
        procedures to effectively administer and implement the Program, 
        and to ensure that all insurers and self-insured entities that 
        participate in the Program are treated comparably under the 
        Program.

    (b) Interim Rules and Procedures.--The Secretary may issue interim 
final rules or procedures specifying the manner in which--
            (1) insurers may file and certify claims under the Program;
            (2) the Federal share of compensation for insured losses 
        will be paid under the Program, including payments based on 
        estimates of or actual insured losses;
            (3) the Secretary may, at any time, seek repayment from or 
        reimburse any insurer, based on estimates of insured losses 
        under the Program, to effectuate the insured loss sharing 
        provisions in section 103; and
            (4) the Secretary will determine any final netting of 
        payments under the Program, including payments owed to the

[[Page 116 STAT. 2333]]

        Federal Government from any insurer and any Federal share of 
        compensation for insured losses owed to any insurer, to 
        effectuate the insured loss sharing provisions in section 103.

    (c) Consultation.--The Secretary shall consult with the NAIC, as the 
Secretary determines appropriate, concerning the Program.
    (d) Contracts for Services.--The Secretary may employ persons or 
contract for services as may be necessary to implement the Program.
    (e) Civil Penalties.--
            (1) In general.--The Secretary may assess a civil monetary 
        penalty in an amount not exceeding the amount under paragraph 
        (2) against any insurer that the Secretary determines, on the 
        record after opportunity for a hearing--
                    (A) has failed to charge, collect, or remit 
                terrorism loss risk-spreading premiums under section 
                103(e) in accordance with the requirements of, or 
                regulations issued under, this title;
                    (B) has intentionally provided to the Secretary 
                erroneous information regarding premium or loss amounts;
                    (C) submits to the Secretary fraudulent claims under 
                the Program for insured losses;
                    (D) has failed to provide the disclosures required 
                under subsection (f); or
                    (E) has otherwise failed to comply with the 
                provisions of, or the regulations issued under, this 
                title.
            (2) Amount.--The amount under this paragraph is the greater 
        of $1,000,000 and, in the case of any failure to pay, charge, 
        collect, or remit amounts in accordance with this title or the 
        regulations issued under this title, such amount in dispute.
            (3) Recovery of amount in dispute.--A penalty under this 
        subsection for any failure to pay, charge, collect, or remit 
        amounts in accordance with this title or the regulations under 
        this title shall be in addition to any such amounts recovered by 
        the Secretary.

    (f) Submission of Premium Information.--
            (1) In general.--The Secretary shall annually compile 
        information on the terrorism risk insurance premium rates of 
        insurers for the preceding year.
            (2) Access to information.--To the extent that such 
        information is not otherwise available to the Secretary, the 
        Secretary may require each insurer to submit to the NAIC 
        terrorism risk insurance premium rates, as necessary to carry 
        out paragraph (1), and the NAIC shall make such information 
        available to the Secretary.
            (3) Availability to congress.--The Secretary shall make 
        information compiled under this subsection available to the 
        Congress, upon request.

    (g) Funding.--
            (1) Federal payments.--There are hereby appropriated, out of 
        funds in the Treasury not otherwise appropriated, such sums as 
        may be necessary to pay the Federal share of compensation for 
        insured losses under the Program.
            (2) Administrative expenses.--There are hereby appropriated, 
        out of funds in the Treasury not otherwise appropriated, such 
        sums as may be necessary to pay reasonable costs of 
        administering the Program.

[[Page 116 STAT. 2334]]

SEC. 105. PREEMPTION AND NULLIFICATION OF PRE-EXISTING TERRORISM 
            EXCLUSIONS.

    (a) General Nullification.--Any terrorism exclusion in a contract 
for property and casualty insurance that is in force on the date of 
enactment of this Act shall be void to the extent that it excludes 
losses that would otherwise be insured losses.
    (b) General Preemption.--Any State approval of any terrorism 
exclusion from a contract for property and casualty insurance that is in 
force on the date of enactment of this Act, shall be void to the extent 
that it excludes losses that would otherwise be insured losses.
    (c) Reinstatement of Terrorism Exclusions.--Notwithstanding 
subsections (a) and (b) or any provision of State law, an insurer may 
reinstate a preexisting provision in a contract for property and 
casualty insurance that is in force on the date of enactment of this Act 
and that excludes coverage for an act of terrorism only--
            (1) if the insurer has received a written statement from the 
        insured that affirmatively authorizes such reinstatement; or
            (2) if--
                    (A) the insured fails to pay any increased premium 
                charged by the insurer for providing such terrorism 
                coverage; and
                    (B) the insurer provided notice, at least 30 days 
                before any such reinstatement, of--
                          (i) the increased premium for such terrorism 
                      coverage; and
                          (ii) the rights of the insured with respect to 
                      such coverage, including any date upon which the 
                      exclusion would be reinstated if no payment is 
                      received.

SEC. 106. PRESERVATION PROVISIONS.

    (a) State Law.--Nothing in this title shall affect the jurisdiction 
or regulatory authority of the insurance commissioner (or any agency or 
office performing like functions) of any State over any insurer or other 
person--
            (1) except as specifically provided in this title; and
            (2) except that--
                    (A) the definition of the term ``act of terrorism'' 
                in section 102 shall be the exclusive definition of that 
                term for purposes of compensation for insured losses 
                under this title, and shall preempt any provision of 
                State law that is inconsistent with that definition, to 
                the extent that such provision of law would otherwise 
                apply to any type of insurance covered by this title;
                    (B) during the period beginning on the date of 
                enactment of this Act and ending on December 31, 2003, 
                rates and forms for terrorism risk insurance covered by 
                this title and filed with any State shall not be subject 
                to prior approval or a waiting period under any law of a 
                State that would otherwise be applicable, except that 
                nothing in this title affects the ability of any State 
                to invalidate a rate as excessive, inadequate, or 
                unfairly discriminatory, and, with respect to forms, 
                where a State has prior approval authority, it shall 
                apply to allow subsequent review of such forms; and

[[Page 116 STAT. 2335]]

                    (C) during the period beginning on the date of 
                enactment of this Act and for so long as the Program is 
                in effect, as provided in section 108, including 
                authority in subsection 108(b), books and records of any 
                insurer that are relevant to the Program shall be 
                provided, or caused to be provided, to the Secretary, 
                upon request by the Secretary, notwithstanding any 
                provision of the laws of any State prohibiting or 
                limiting such access.

    (b) Existing Reinsurance Agreements.--Nothing in this title shall be 
construed to alter, amend, or expand the terms of coverage under any 
reinsurance agreement in effect on the date of enactment of this Act. 
The terms and conditions of such an agreement shall be determined by the 
language of that agreement.

SEC. 107. LITIGATION MANAGEMENT.

    (a) Procedures and Damages.--
            (1) In general.--If the Secretary makes a determination 
        pursuant to section 102 that an act of terrorism has occurred, 
        there shall exist a Federal cause of action for property damage, 
        personal injury, or death arising out of or resulting from such 
        act of terrorism, which shall be the exclusive cause of action 
        and remedy for claims for property damage, personal injury, or 
        death arising out of or relating to such act of terrorism, 
        except as provided in subsection (b).
            (2) Preemption of state actions.--All State causes of action 
        of any kind for property damage, personal injury, or death 
        arising out of or resulting from an act of terrorism that are 
        otherwise available under State law are hereby preempted, except 
        as provided in subsection (b).
            (3) Substantive law.--The substantive law for decision in 
        any such action described in paragraph (1) shall be derived from 
        the law, including choice of law principles, of the State in 
        which such act of terrorism occurred, unless such law is 
        otherwise inconsistent with or preempted by Federal law.
            (4) Jurisdiction.--For <<NOTE: Deadline.>> each 
        determination described in paragraph (1), not later than 90 days 
        after the occurrence of an act of terrorism, the Judicial Panel 
        on Multidistrict Litigation shall designate 1 district court or, 
        if necessary, multiple district courts of the United States that 
        shall have original and exclusive jurisdiction over all actions 
        for any claim (including any claim for loss of property, 
        personal injury, or death) relating to or arising out of an act 
        of terrorism subject to this section. The Judicial Panel on 
        Multidistrict Litigation shall select and assign the district 
        court or courts based on the convenience of the parties and the 
        just and efficient conduct of the proceedings. For purposes of 
        personal jurisdiction, the district court or courts designated 
        by the Judicial Panel on Multidistrict Litigation shall be 
        deemed to sit in all judicial districts in the United States.
            (5) Punitive damages.--Any amounts awarded in an action 
        under paragraph (1) that are attributable to punitive damages 
        shall not count as insured losses for purposes of this title.

    (b) Exclusion.--Nothing in this section shall in any way limit the 
liability of any government, an organization, or person who knowingly 
participates in, conspires to commit, aids and abets, or commits any act 
of terrorism with respect to which a determination described in 
subsection (a)(1) was made.

[[Page 116 STAT. 2336]]

    (c) Right of Subrogation.--The United States shall have the right of 
subrogation with respect to any payment or claim paid by the United 
States under this title.
    (d) Relationship to Other Law.--Nothing in this section shall be 
construed to affect--
            (1) any party's contractual right to arbitrate a dispute; or
            (2) any provision of the Air Transportation Safety and 
        System Stabilization Act (Public Law 107-42; 49 U.S.C. 40101 
        note.).

    (e) Effective <<NOTE: Applicability.>> Period.--This section shall 
apply only to actions described in subsection (a)(1) that arise out of 
or result from acts of terrorism that occur or occurred during the 
effective period of the Program.

SEC. 108. TERMINATION OF PROGRAM.

    (a) Termination of Program.--The Program shall terminate on December 
31, 2005.
    (b) Continuing Authority to Pay or Adjust Compensation.--Following 
the termination of the Program, the Secretary may take such actions as 
may be necessary to ensure payment, recoupment, reimbursement, or 
adjustment of compensation for insured losses arising out of any act of 
terrorism occurring during the period in which the Program was in effect 
under this title, in accordance with the provisions of section 103 and 
regulations promulgated thereunder.
    (c) Repeal; Savings Clause.--This title is repealed on the final 
termination date of the Program under subsection (a), except that such 
repeal shall not be construed--
            (1) to prevent the Secretary from taking, or causing to be 
        taken, such actions under subsection (b) of this section, 
        paragraph (4), (5), (6), (7), or (8) of section 103(e), or 
        subsection (a)(1), (c), (d), or (e) of section 104, as in effect 
        on the day before the date of such repeal, or applicable 
        regulations promulgated thereunder, during any period in which 
        the authority of the Secretary under subsection (b) of this 
        section is in effect; or
            (2) to prevent the availability of funding under section 
        104(g) during any period in which the authority of the Secretary 
        under subsection (b) of this section is in effect.

    (d) Study and Report on the Program.--
            (1) Study.--The Secretary, in consultation with the NAIC, 
        representatives of the insurance industry and of policy holders, 
        other experts in the insurance field, and other experts as 
        needed, shall assess the effectiveness of the Program and the 
        likely capacity of the property and casualty insurance industry 
        to offer insurance for terrorism risk after termination of the 
        Program, and the availability and affordability of such 
        insurance for various policyholders, including railroads, 
        trucking, and public transit.
            (2) Report.--The <<NOTE: Deadline.>> Secretary shall submit 
        a report to the Congress on the results of the study conducted 
        under paragraph (1) not later than June 30, 2005.

[[Page 116 STAT. 2337]]

                 TITLE II--TREATMENT OF TERRORIST ASSETS

SEC. 201. SATISFACTION OF JUDGMENTS FROM BLOCKED ASSETS OF TERRORISTS, 
            TERRORIST ORGANIZATIONS, AND STATE SPONSORS OF TERRORISM.

    (a) In <<NOTE: 28 USC 1610 note.>> General.--Notwithstanding any 
other provision of law, and except as provided in subsection (b), in 
every case in which a person has obtained a judgment against a terrorist 
party on a claim based upon an act of terrorism, or for which a 
terrorist party is not immune under section 1605(a)(7) of title 28, 
United States Code, the blocked assets of that terrorist party 
(including the blocked assets of any agency or instrumentality of that 
terrorist party) shall be subject to execution or attachment in aid of 
execution in order to satisfy such judgment to the extent of any 
compensatory damages for which such terrorist party has been adjudged 
liable.

    (b) Presidential <<NOTE: 28 USC 1610 note.>> Waiver.--
            (1) In general.--Subject to paragraph (2), upon determining 
        on an asset-by-asset basis that a waiver is necessary in the 
        national security interest, the President may waive the 
        requirements of subsection (a) in connection with (and prior to 
        the enforcement of) any judicial order directing attachment in 
        aid of execution or execution against any property subject to 
        the Vienna Convention on Diplomatic Relations or the Vienna 
        Convention on Consular Relations.
            (2) Exception.--A waiver under this subsection shall not 
        apply to--
                    (A) property subject to the Vienna Convention on 
                Diplomatic Relations or the Vienna Convention on 
                Consular Relations that has been used by the United 
                States for any nondiplomatic purpose (including use as 
                rental property), or the proceeds of such use; or
                    (B) the proceeds of any sale or transfer for value 
                to a third party of any asset subject to the Vienna 
                Convention on Diplomatic Relations or the Vienna 
                Convention on Consular Relations.

    (c) Special Rule for Cases Against Iran.--Section 2002 of the 
Victims of Trafficking and Violence Protection Act of 2000 (Public Law 
106-386; 114 Stat. 1542), as amended by section 686 of Public Law 107-
228, <<NOTE: Ante, p. 1411.>> is further amended--
            (1) in subsection (a)(2)(A)(ii), by striking ``July 27, 
        2000, or January 16, 2002'' and inserting ``July 27, 2000, any 
        other date before October 28, 2000, or January 16, 2002'';
            (2) in subsection (b)(2)(B), by inserting after ``the date 
        of enactment of this Act'' the following: ``(less amounts 
        therein as to which the United States has an interest in 
        subrogation pursuant to subsection (c) arising prior to the date 
        of entry of the judgment or judgments to be satisfied in whole 
        or in part hereunder)'';
            (3) <<NOTE: 28 USC 1606, 1610 and note.>> by redesignating 
        subsections (d), (e), and (f) as subsections (e), (f), and (g), 
        respectively; and
            (4) by inserting after subsection (c) the following new 
        subsection (d):

    ``(d) Distribution of Account Balances and Proceeds Inadequate to 
Satisfy Full Amount of Compensatory Awards Against Iran.--

[[Page 116 STAT. 2338]]

            ``(1)  Prior judgments.--
                    ``(A) In general.--In the event that the Secretary 
                determines that 90 percent of the amounts available to 
                be paid under subsection (b)(2) are inadequate to pay 
                the total amount of compensatory damages awarded in 
                judgments issued as of the date of the enactment of this 
                subsection in cases identified in subsection (a)(2)(A) 
                with respect to Iran, the Secretary shall, not later 
                than 60 days after such date, make payment from such 
                amounts available to be paid under subsection (b)(2) to 
                each party to which such a judgment has been issued in 
                an amount equal to a share, calculated under 
                subparagraph (B), of 90 percent of the amounts available 
                to be paid under subsection (b)(2) that have not been 
                subrogated to the United States under this Act as of the 
                date of enactment of this subsection.
                    ``(B) Calculation of payments.--The share that is 
                payable to a person under subparagraph (A), including 
                any person issued a final judgment as of the date of 
                enactment of this subsection in a suit filed on a date 
                added by the amendment made by section 686 of Public Law 
                107-228, shall be equal to the proportion that the 
                amount of unpaid compensatory damages awarded in a final 
                judgment issued to that person bears to the total amount 
                of all unpaid compensatory damages awarded to all 
                persons to whom such judgments have been issued as of 
                the date of enactment of this subsection in cases 
                identified in subsection (a)(2)(A) with respect to Iran.
            ``(2) Subsequent judgment.--
                    ``(A) In general.--The Secretary shall pay to any 
                person awarded a final judgment after the date of 
                enactment of this subsection, in the case filed on 
                January 16, 2002, and identified in subsection (a)(2)(A) 
                with respect to Iran, an amount equal to a share, 
                calculated under subparagraph (B), of the balance of the 
                amounts available to be paid under subsection (b)(2) 
                that remain following the disbursement of all payments 
                as provided by paragraph (1). The Secretary shall make 
                such payment not later than 30 days after such judgment 
                is awarded.
                    ``(B) Calculation of payments.--To the extent that 
                funds are available, the amount paid under subparagraph 
                (A) to such person shall be the amount the person would 
                have been paid under paragraph (1) if the person had 
                been awarded the judgment prior to the date of enactment 
                of this subsection.
            ``(3) Additional payments.--
                    ``(A) In <<NOTE: Deadline.>> general.--Not later 
                than 30 days after the disbursement of all payments 
                under paragraphs (1) and (2), the Secretary shall make 
                an additional payment to each person who received a 
                payment under paragraph (1) or (2) in an amount equal to 
                a share, calculated under subparagraph (B), of the 
                balance of the amounts available to be paid under 
                subsection (b)(2) that remain following the disbursement 
                of all payments as provided by paragraphs (1) and (2).
                    ``(B) Calculation of payments.--The share payable 
                under subparagraph (A) to each such person shall be 
                equal

[[Page 116 STAT. 2339]]

                to the proportion that the amount of compensatory 
                damages awarded that person bears to the total amount of 
                all compensatory damages awarded to all persons who 
                received a payment under paragraph (1) or (2).
            ``(4) Statutory construction.--Nothing in this subsection 
        shall bar, or require delay in, enforcement of any judgment to 
        which this subsection applies under any procedure or against 
        assets otherwise available under this section or under any other 
        provision of law.
            ``(5) Certain rights and claims not relinquished.--Any 
        person receiving less than the full amount of compensatory 
        damages awarded to that party in a judgment to which this 
        subsection applies shall not be required to make the election 
        set forth in subsection (a)(2)(B) or, with respect to subsection 
        (a)(2)(D), the election relating to relinquishment of any right 
        to execute or attach property that is subject to section 
        1610(f)(1)(A) of title 28, United States Code, except that such 
        person shall be required to relinquish rights set forth--
                    ``(A) in subsection (a)(2)(C); and
                    ``(B) in subsection (a)(2)(D) with respect to 
                enforcement against property that is at issue in claims 
                against the United States before an international 
                tribunal or that is the subject of awards by such 
                tribunal.
            ``(6) Guidelines for establishing claims of a right to 
        payment.--The Secretary may promulgate reasonable guidelines 
        through which any person claiming a right to payment under this 
        section may inform the Secretary of the basis for such claim, 
        including by submitting a certified copy of the final judgment 
        under which such right is claimed and by providing commercially 
        reasonable payment instructions. The Secretary shall take all 
        reasonable steps necessary to ensure, to the maximum extent 
        practicable, that such guidelines shall not operate to delay or 
        interfere with payment under this section.''.

    (d) Definitions.--In <<NOTE: 28 USC 1610 note.>> this section, the 
following definitions shall apply:
            (1) Act of terrorism.--The term ``act of terrorism'' means--
                    (A) any act or event certified under section 102(1); 
                or
                    (B) to the extent not covered by subparagraph (A), 
                any terrorist activity (as defined in section 
                212(a)(3)(B)(iii) of the Immigration and Nationality Act 
                (8 U.S.C. 1182(a)(3)(B)(iii))).
            (2) Blocked asset.--The term ``blocked asset'' means--
                    (A) any asset seized or frozen by the United States 
                under section 5(b) of the Trading With the Enemy Act (50 
                U.S.C. App. 5(b)) or under sections 202 and 203 of the 
                International Emergency Economic Powers Act (50 U.S.C. 
                1701; 1702); and
                    (B) does not include property that--
                          (i) is subject to a license issued by the 
                      United States Government for final payment, 
                      transfer, or disposition by or to a person subject 
                      to the jurisdiction of the United States in 
                      connection with a transaction for which the 
                      issuance of such license has been specifically 
                      required by statute other than the International

[[Page 116 STAT. 2340]]

                      Emergency Economic Powers Act (50 U.S.C. 1701 et 
                      seq.) or the United Nations Participation Act of 
                      1945 (22 U.S.C. 287 et seq.); or
                          (ii) in the case of property subject to the 
                      Vienna Convention on Diplomatic Relations or the 
                      Vienna Convention on Consular Relations, or that 
                      enjoys equivalent privileges and immunities under 
                      the law of the United States, is being used 
                      exclusively for diplomatic or consular purposes.
            (3) Certain property.--The term ``property subject to the 
        Vienna Convention on Diplomatic Relations or the Vienna 
        Convention on Consular Relations'' and the term ``asset subject 
        to the Vienna Convention on Diplomatic Relations or the Vienna 
        Convention on Consular Relations'' mean any property or asset, 
        respectively, the attachment in aid of execution or execution of 
        which would result in a violation of an obligation of the United 
        States under the Vienna Convention on Diplomatic Relations or 
        the Vienna Convention on Consular Relations, as the case may be.
            (4) Terrorist party.--The term ``terrorist party'' means a 
        terrorist, a terrorist organization (as defined in section 
        212(a)(3)(B)(vi) of the Immigration and Nationality Act (8 
        U.S.C. 1182(a)(3)(B)(vi))), or a foreign state designated as a 
        state sponsor of terrorism under section 6(j) of the Export 
        Administration Act of 1979 (50 U.S.C. App. 2405(j)) or section 
        620A of the Foreign Assistance Act of 1961 (22 U.S.C. 2371).

               TITLE III--FEDERAL RESERVE BOARD PROVISIONS

SEC. 301. CERTAIN AUTHORITY OF THE BOARD OF GOVERNORS OF THE FEDERAL 
            RESERVE SYSTEM.

    Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by 
adding at the end the following new subsection:
    ``(r)(1) Any action that this Act provides may be taken only upon 
the affirmative vote of 5 members of the Board may be taken upon the 
unanimous vote of all members then in office if there are fewer than 5 
members in office at the time of the action.
    ``(2)(A) Any action that the Board is otherwise authorized to take 
under section 13(3) may be taken upon the unanimous vote of all 
available members then in office, if--
            ``(i) at least 2 members are available and all available 
        members participate in the action;
            ``(ii) the available members unanimously determine that--
                    ``(I) unusual and exigent circumstances exist and 
                the borrower is unable to secure adequate credit 
                accommodations from other sources;
                    ``(II) action on the matter is necessary to prevent, 
                correct, or mitigate serious harm to the economy or the 
                stability of the financial system of the United States;
                    ``(III) despite the use of all means available 
                (including all available telephonic, telegraphic, and 
                other electronic means), the other members of the Board 
                have not been able to be contacted on the matter; and

[[Page 116 STAT. 2341]]

                    ``(IV) action on the matter is required before the 
                number of Board members otherwise required to vote on 
                the matter can be contacted through any available means 
                (including all available telephonic, telegraphic, and 
                other electronic means); and
            ``(iii) any credit extended by a Federal reserve bank 
        pursuant to such action is payable upon demand of the Board.

    ``(B) <<NOTE: Records.>> The available members of the Board shall 
document in writing the determinations required by subparagraph (A)(ii), 
and such written findings shall be included in the record of the action 
and in the official minutes of the Board, and copies of such record 
shall be provided as soon as practicable to the members of the Board who 
were not available to participate in the action and to the Chairman of 
the Committee on Banking, Housing, and Urban Affairs of the Senate and 
to the Chairman of the Committee on Financial Services of the House of 
Representatives.''.

    Approved November 26, 2002.

LEGISLATIVE HISTORY--H.R. 3210 (S. 2600):
---------------------------------------------------------------------------

HOUSE REPORTS: Nos. 107-300, Pt. 1 (Comm. on Financial Services) and Pt. 
2 (Comm. on Ways and Means) and 107-779 (Comm. of Conference).
CONGRESSIONAL RECORD:
                                                        Vol. 147 (2001):
                                    Nov. 29, considered and passed 
                                        House.
                                                        Vol. 148 (2002):
                                    July 25, considered and passed 
                                        Senate, amended, in lieu of S. 
                                        2600.
                                    Nov. 14, House agreed to conference 
                                        report.
                                    Nov. 19, Senate agreed to conference 
                                        report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 38 (2002):
            Nov. 26, Presidential remarks.

                                  <all>
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