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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2873 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 2873

     To amend the Robert T. Stafford Disaster Relief and Emergency 
  Assistance Act to provide for an expanded Federal program of hazard 
  mitigation, relief, and insurance against the risk of catastrophic 
   natural disasters, such as hurricanes, earthquakes, and volcanic 
                   eruptions, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             August 4, 1993

  Mr. Mineta (for himself and Mr. Boehlert) introduced the following 
bill; which was referred jointly to the Committees on Public Works and 
         Transportation and Banking, Finance and Urban Affairs

                            February 2, 1994

 Additional sponsors: Mr. Gibbons, Mr. Young of Alaska, Mr. Shaw, Mr. 
     Bacchus of Florida, Mr. Porter, Mr. Quillen, Mr. Ravenel, Mr. 
Sundquist, Ms. Brown of Florida, Mr. Mica, Mr. McCollum, Mr. Underwood, 
   Mr. Johnston of Florida, Mr. Peterson of Florida, Mr. Hutto, Mr. 
  Canady, Mr. Knollenberg, Mr. Lipinski, Mr. Ewing, Mr. Deutsch, Mr. 
 DeFazio, Mr. Cooper, Mr. Brown of California, Mr. Burton of Indiana, 
Mr. Hastings, Mr. Miller of Florida, Mr. Taylor of North Carolina, Mr. 
 Hobson, Ms. Eddie Bernice Johnson of Texas, Mr. Laughlin, Mr. Filner, 
    Mr. Stark, Mr. Gordon, Mr. Bilirakis, Mr. Lewis of Florida, Mr. 
Clinger, Mr. Oberstar, Mr. Levy, Mr. Lewis of California, Mr. Kleczka, 
   Mr. Gene Green of Texas, Mr. Swift, Ms. Molinari, Mr. Rahall, Mr. 
 Callahan, Mrs. Lloyd, Mr. Bachus of Alabama, Mr. Stenholm, Mrs. Meek, 
Mr. Derrick, Mr. Minge, Mr. Tanner, Ms. Dunn, Mr. Calvert, Mr. Volkmer, 
Ms. Ros-Lehtinen, Mr. Torricelli, Mr. Jefferson, Mr. Clyburn, Mr. Diaz-
Balart, Mr. Swett, Mr. Farr of California, Mr. Clement, Mr. Spence, Ms. 
Cantwell, Mr. Borski, Mrs. Fowler, Mr. Weldon, Mr. Condit, Mr. Bliley, 
  Mr. Engel, Mr. Foglietta, Mr. Doolittle, Mr. Ford of Tennessee, Mr. 
   Hayes, Mr. Gillmor, Mr. Tucker, Mr. Costello, and Mr. Edwards of 
                               California

_______________________________________________________________________

                                 A BILL

 
     To amend the Robert T. Stafford Disaster Relief and Emergency 
  Assistance Act to provide for an expanded Federal program of hazard 
  mitigation, relief, and insurance against the risk of catastrophic 
   natural disasters, such as hurricanes, earthquakes, and volcanic 
                   eruptions, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act shall be cited as the ``Natural Disaster Protection Act of 
1993''.

SEC. 2. FINDINGS AND PURPOSES.

    Section 101 of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5121) is amended as follows:
    (a) In subsection (a), by--
            (1) striking ``and'' in paragraph (1);
            (2) inserting ``and'' following the semicolon in paragraph 
        (2);
            (3) inserting the following new paragraph before ``special 
        measures'':
            ``(3) because catastrophic natural disasters, such as major 
        hurricanes, earthquakes, and volcanic eruptions, pose 
        particular problems in terms of substantial long-term 
        consequences, ill-equipped preparedness efforts, lack of hazard 
        mitigation measures (such as enforced building codes), and 
        inadequate insurance and reinsurance coverage;'';
            (4) inserting ``promoting hazard mitigation compliance and 
        in'' after ``affected States in''; and
            (5) inserting ``insurance and reinsurance coverage,'' after 
        ``rendering of aid, assistance,''.
    (b) In subsection (b), by--
            (1) inserting before the semicolon in paragraph (1) ``by 
        including State hazard mitigation compliance, Federal primary 
        insurance, and Federal excess reinsurance programs'';
            (2) inserting after ``preparedness'' in paragraph (2) ``, 
        hazard mitigation compliance,'';
            (3) striking the second ``and'' in paragraph (3) and 
        inserting in lieu thereof ``, hazard mitigation, emergency 
        first response'';
            (4) striking ``insurance coverage'' in paragraph (4) and 
        inserting in lieu thereof ``multi-hazard primary insurance 
        coverage with premiums based on risk'';
            (5) inserting before the semicolon in paragraph (4) ``and 
        creating a Federal excess reinsurance program in partnership 
        with the private-sector to speed rebuilding following a 
        catastrophic natural disaster'';
            (6) inserting before the semicolon in paragraph (5) ``and 
        the adoption and enforcement of multi-hazard building codes, 
        and improved first responder capabilities''; and
            (7) inserting after ``disasters'' in paragraph (6) ``and a 
        self-sustaining funding mechanism to help States pay for hazard 
        mitigation.''.

SEC. 3. DEFINITIONS.

    Section 102 of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5122) is amended as follows:
    (a) In paragraph (7) add ``the Federal National Mortgage 
Association, and the Federal Home Loan Mortgage Corporation,'' 
following ``United State Postal Service,''.
        (b) Add at the end the following new paragraphs:
            ``(10) The term `critical facilities' means schools and 
        structures essential to emergency services necessary for post 
        natural disaster recovery (including hospitals, fire and police 
        facilities, temporary shelters, and emergency operating and 
        preparedness centers).
            ``(11) The term `Director' means the Director of the 
        Federal Emergency Management Agency.
            ``(12) The term `disaster-prone State' means any State 
        determined by the Director pursuant to section 701 to be a 
        hurricane-prone, windstorm-prone, earthquake-prone, volcanic 
        eruption-prone, or flood-prone State.
            ``(13) The term `earthquake' means any shaking or trembling 
        of the crust of the earth caused by underground seismic forces 
        or by breaking and shifting of rock beneath the surface.
            ``(14) The term `earthquake-prone State' means a State 
        determined by the Director pursuant to section 701 to have an 
        exposure to the earthquake peril.
            ``(15) The term `Federal assistance' means any form of 
        financial aid, including grants, loans, loan-guarantees, 
        subsidies, insurance, and payments, provided by a Federal 
        agency.
            ``(16) The term `first responder' means those fire 
        fighting, police, and emergency medical personnel with the 
        statutory authority to engage in and provide immediate 
        emergency response services.
            ``(17) The term `flood' or `flooding' means a general and 
        temporary condition of partial or complete inundation of 
        normally dry land areas from the overflow of inland or tidal 
        waters or the unusual and rapid accumulation of runoff of 
        surface waters from any source.
            ``(18) The term `flood-prone State' means a State 
        determined by the Director pursuant to section 701 to have an 
        exposure to the flood peril.
            ``(19) The term `hurricane' means a non-frontal, warm core, 
        low pressure atmospheric system having a definite organized 
        circulation, including any associated windstorm events 
        occurring within 72 hours before and after the hurricane, with 
        sustained wind speeds of 74 miles per hour or greater and 
        officially declared to be a hurricane by the National Hurricane 
        Center.
            ``(20) The term `hurricane-prone State' means a State 
        determined by the Director pursuant to section 701 to have an 
        exposure to the hurricane peril.
            ``(21) The term `hurricane zone' means an area within a 
        State identified by the Director as being subject to major risk 
        from the hurricane peril.
            ``(22) The term `insurance industry' means all private 
        insurers and private reinsurers.
            ``(23) The term `lifelines' means critical public 
        infrastructure, including highways, bridges, water 
        transportation and treatment facilities, electric transmission 
        systems, pipelines, and telecommunications networks.
            ``(24) The term `local community' means a political 
        subdivision of a State which has zoning and building code 
        jurisdiction over a particular area which is exposed to the 
        hurricane, windstrom, earthquake, volcanic-eruption, or flood 
        peril.
            ``(25) The term `multi-hazard coverage' means policies, 
        riders, or endorsements of insurance issued on Federal paper 
        pursuant to subtitle A of title VIII that provide indemnity, in 
        whole or in part, for the loss, destruction, or damage of 
        residential property.
            ``(26) The term `ordinance or law coverage' means insurance 
        coverage for the increased cost of construction to repair or 
        rebuild structures and the cost of demolition due to the 
        enforcement of any ordinance or law, such as building codes.
            ``(27) The terms `private insurer' and `private reinsurer' 
        mean any insurer or reinsurer that is (A) licensed or admitted 
        to write property and casualty insurance or reinsurance within 
        a State, or (B) is a branch of an insurer or reinsurer 
        organized or incorporated in a country other than the United 
        States that is entered through and licensed by a State to 
        conduct insurance or reinsurance business. In the case of an 
        insurance exchange or group of unincorporated underwriters, the 
        term means an underwriting syndicate, notwithstanding the 
        licensed or admitted status of the insurance exchange or group 
        of unincorporated underwriters.
            ``(28) The term `residential property' means any (A) 1- to 
        4-family residential structure (including mobile or 
        manufactured homes) and the personal property therein, and (B) 
        personal property of occupants of residential structures 
        (including condominiums, cooperatives, and apartment 
        structures).
            ``(29) The term `seismic zone' means an area within a State 
        identified by the Director as being subject to major risk from 
        the earthquake peril.
            ``(30) The term `State residual insurance pooling program' 
        means any State-authorized joint underwriting or joint 
        reinsurance association, risk pool, residual market mechanism, 
        or other type of State-sanctioned entity providing property 
        insurance coverage against hurricanes, earthquakes, volcanic 
        eruptions, or tsunamis.
            ``(31) The term `substantially modified building 
        construction' means additional or improvements to an existing 
        structure which constitute at least a 50 percent increase in 
        the overall value of the structure.
            ``(32) The term `supplemental losses' means claim and loss 
        adjustment expense payments for the multi-hazard coverage 
        issued pursuant to subtitle A of title VIII that exceed the 
        accumulated amounts in the Primary Insurance Program Fund.
            ``(33) The term `tsunami' means an ocean wave generated by 
        underwater disturbances in the earth's crust, primarily 
        earthquakes and submarine volcanic eruptions.
            ``(34) The term `volcanic eruption' means the expulsion, as 
        a result of natural causes, of molten rock, rock fragments, 
        gases, ashes, mud, lava flows, and other natural substances 
        through an opening in the crust of the Earth.
            ``(35) The term `volcanic eruption-prone State' means a 
        State determined by the Director pursuant to section 701 to 
        have an exposure to the volcanic eruption peril.
            ``(36) The term `volcanic zone' means an area within a 
        State identified by the Director as being subject to major risk 
        from the volcanic eruption peril.
            ``(37) the term `windstorm' means an atmospheric 
        disturbance marked by high velocity movements of air, such as a 
        tornado, but does not include a hurricane.
            ``(38) The term `windstorm-prone State' means a State 
        determined by the Director pursuant to section 701 to have an 
        exposure to the windstorm peril.''.

SEC. 4. DISASTER ASSISTANCE AMENDMENTS.

    Title IV of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5121 et seq.) is amended as follows:
    (a) In section 404 (42 U.S.C. 7170c), add ``(a) Hazard Mitigation 
Grants.--'' following the section heading and add the following new 
subsections at the end:
    ``(b) Hazard Mitigation Initiatives.--Consistent with this title 
and other existing Federal law, the Director shall develop programs to 
carry out the following multi-hazard mitigation and emergency 
management initiatives--
            ``(1) the development of model building codes and other 
        hazard mitigation measures for catastrophic natural disasters, 
        such as hurricanes, windstorms, earthquakes, volcanic-
        eruptions, or floods, which are based on both preventing 
        personal injuries and mitigating property damage;
            ``(2) adequate training and licensing of architects, 
        engineers building inspectors, building code enforcement 
        personnel, planners, and similar professionals to ensure proper 
        compliance with hazard mitigation standards;
            ``(3) expanded research to strengthen building codes and 
        promote development of cost-effective building technologies and 
        related hazard mitigation measures;
            ``(4) the transfer of hazard mitigation technology to 
        States, local communities, and other persons, such as private 
        building contractors, responsible for the implementation and 
        enforcement of hazard mitigation measures;
            ``(5) aid for Federal, State, and local emergency response 
        operations following natural disasters which could include the 
        acquisition of additional facilities, equipment, and personnel 
        as well as resources for training and public assistance; and
            ``(6) education to enhance public awareness of the risk of 
        and hazards from natural disasters and ways to mitigate the 
        personal, physical, and economic losses.
    ``(c) Federal Regulations.--Within 18 months of the date of 
enactment of the Natural Disaster Protection Act of 1993, the Director, 
in coordination with other Federal agencies, shall issue final multi-
hazard mitigation regulations necessary to carry out the hazard 
mitigation activities described in subsection (b). Such regulations 
shall be issued pursuant to the provisions of subchapter II of charter 
5 of title 5, United States Code.''.
    (b) In section 405 (42 U.S.C. 5171), add the following new 
subsection at the end:
    ``(d) Federally-Connected Buildings.--All new buildings owned or 
leased by any Federal agency or receiving Federal assistance shall meet 
the newest edition of the relevant building code requirements, 
including relevant building and housing codes and performance building 
standards. Within 18 months of the date of enactment of the Natural 
Disaster Protection Act of 1993, the Director, in coordination with 
other Federal agencies, shall issue final regulations necessary to 
carry out this subsection, pursuant to the provisions of subchapter II 
of chapter 5 of title 5, United States Code.''.
    (c) In section 406 (42 U.S.C. 5172), add the following new 
subsection at the end:
    ``(g) Mitigation Non-Compliance Penalty.--No public assistance 
disaster funds under this section shall be provided to any local 
community which has failed, within 5 years from the date of enactment 
of the Natural Disaster Protection Act of 1993, to comply with the 
multi-hazard building and safety codes described in section 702(a) and 
the flood performance standards described in section 702(b).''.
    (d) In section 407 (42 U.S.C. 5173), add the following new 
subsection at the end:
    ``(e) Mitigation Non-Compliance Penalty.--No public assistance 
disaster funds under this section shall be provided to any local 
community which has failed, within 5 years from the date of enactment 
of the Natural Disaster Protection Act of 1993, to comply with the 
multi-hazard building and safety codes described in section 702(a) and 
the flood performance standards described in section 702(b).''.

SEC. 5. MULTI-HAZARD MITIGATION PROGRAM.

    The Robert T. Stafford Disaster Relief and Emergency Assistance Act 
(42 U.S.C. 5121 et seq.) is amended by adding at the end the following 
new title:

               TITLE VII--MULTI-HAZARD MITIGATION PROGRAM

``SEC. 701. IDENTIFICATION AND DESIGNATION OF DISASTER-PRONE STATES.

    ``(a) Initial Identification.--The Director, consistent with 
existing Federal law, shall identify States which are prone to damages 
from the following natural disaster perils--
            ``(1) hurricanes;
            ``(2) windstorms;
            ``(3) earthquakes;
            ``(4) volcanic eruptions; and
            ``(5) flooding.
    ``(b) Designation by Peril.--The Director shall designate all 
States identified pursuant to subsection (a) as disaster-prone States, 
and separately designate States as hurricane-prone, windstorm-prone, 
earthquake-prone, volcanic eruption-prone, or flood-prone, as 
appropriate, within 1 year of the date of the enactment of the Natural 
Disaster Protection Act of 1993. The Director shall cause a listing of 
such States to be published in the Federal Register and in widely 
circulated local newspapers in the applicable States before the 
expiration of such 1-year period.
    ``(c) Final Notification.--The designation for each State under 
subsection (b) shall become final for the purposes of this Act 6 months 
after such designations are published in the Federal Register. The 
Director shall notify the chief executive officer of each such State 
designated, in writing, before the expiration of such 6-month period.
    ``(d) Ongoing Designation and Notification.--Based upon any 
additional hurricane, windstorm, seismic, volcanic, or flood 
information that from time-to-time becomes available, the Director may 
designate States (not designated under subsection (b)) having an 
exposure to hurricane, windstorm, earthquake, volcanic eruption, or 
flood perils. Any such States shall be designated pursuant to the terms 
of subsection (b) and notified pursuant to terms of subsection (c).
    ``(e) Appeal.--Any State aggrieved by a final determination as a 
disaster-prone State, pursuant to subsections (c) or (d), may, after 
exhausting administrative remedies, appeal such determination to any 
United States district court for a district located within the State, 
not more than 60 days after receipt of notice of such determination. 
The scope of review by the court shall be as provided under chapter 7 
of title 5, United States Code. During the pendency of any such 
litigation, all determinations of the Director shall be effective and 
final for the purposes of this title unless stayed by the court for 
good cause shown.

``SEC. 702. BUILDING AND SAFETY STANDARDS.

    ``(a) Multi-Hazard Building and Safety Codes.--At a minimum, each 
State designated as a hurricane-prone State, a windstorm-prone State, 
or an earthquake-prone State shall either--
            ``(1) for all new and substantially modified building 
        construction in that State, adopt the relevant natural disaster 
        hazard mitigation portions of the newest edition of the 
        National Building Code, the Standard Building Code, or the 
        Uniform Building Code and other relevant building and housing 
        codes and standards, including the national consensus safety 
        codes of the National Fire Protection Association (specifically 
        the National Electrical Code, the National Fuel Gas Code, the 
        Flammable and Combustible Liquids Code, and the Standard for 
        the Storage and Handling of Liquified Petroleum Gases); or
            ``(2) certify that the State's local communities have 
        adopted and are enforcing building codes which meet or exceed 
        the minimum natural disaster hazard mitigation portions of any 
        of the 3 model building codes and other building and housing 
        codes and standards described in paragraph (1) for all new and 
        substantially modified building construction in that State.
    ``(b) Flood Performance Standards.--At a minimum, each State 
designated as a flood-prone State shall either--
            ``(1) adopt the relevant flood minimum performance 
        standards, flood-proofing, and other flood protection measures 
        authorized pursuant to the National Flood Insurance Act of 
        1968, as amended (42 U.S.C. 4001 et seq.), which minimize flood 
        damage for new and substantially modified building construction 
        located in flood-prone local communities; or
            ``(2) certify that all the State's flood-prone local 
        communities have adopted and are enforcing the minimum 
        performance standards described in paragraph (1) for new and 
        substantially modified building construction.

``SEC. 703. STATE MITIGATION PLANS.

    ``(a) General Authority.--Each State designated as a disaster-prone 
State shall either--
            ``(1) develop a mitigation plan which establishes the 
        State's plan with accompanying schedules for improving the 
        State's ability to reduce the hazards of future natural 
        disasters, such as hurricanes, windstorms, earthquakes, 
        volcanic-eruptions, or floods; or
            ``(2) designate an existing mitigation plan which includes 
        the processes described in subsection (b).
    ``(b) Content of State Mitigation Plans.--Each State mitigation 
plan shall include, at a minimum, a process for--
            ``(1) verifying compliance with the multi-hazard building 
        and safety codes described in section 702(a) and the flood 
        performance standards described in section 702(b) to ensure 
        these building standards are being enforced;
            ``(2) identifying, consistent with the National Flood 
        Insurance Act, as amended (42 U.S.C. 4001 et seq.), the areas 
        within the State which have some risk from the hazards of 
        natural disasters, including hurricanes, windstorms, 
        earthquakes, volcanic eruptions, and floods, and further 
        categorizing at-risk areas based on the degree of risk;
            ``(3) establishing priorities by risk and location of which 
        types of structures, including State buildings, lifelines, and 
        critical facilities, may be in need of hazard mitigation;
            ``(4) identifying which hazard mitigation measures, such as 
        building codes, non-structural mitigation, and retrofitting, 
        for each of the natural disaster perils that are most cost-
        effective and most likely to prevent personal injury and reduce 
        property losses;
            ``(5) improving the emergency response to natural 
        disasters, which shall include capabilities for fire fighting, 
        search and rescue, and the provision of shelters, 
        communications, and medical relief;
            ``(6) expediting the rebuilding of lifelines and the 
        recovery by individuals and the State's business and commercial 
        sector;
            ``(7) encouraging the development of local community-based 
        hazard mitigation plans;
            ``(8) achieving compliance with and enforcement of the 
        Federal multi-hazard mitigation standards or requirements set 
        forth in regulations promulgated by the Director pursuant to 
        this Act; and
            ``(9) developing standards and guidelines for the safe 
        staffing, operations, and regular training of first responders 
        for disaster emergency mitigation.
    ``(c) Submission of State Mitigation Plans to FEMA.--Within 2 years 
of being designated disaster-prone pursuant to section 701, each 
disaster-prone State shall submit its completed mitigation plan to the 
Director.

``SEC. 704. COMPLIANCE BY STATES.

    ``(a) Definition of Compliance State.--A disaster-prone State shall 
be considered a compliance State for purposes of this title, if within 
5 years of the date of enactment of the Natural Disaster Protection Act 
of 1993, the State is certified under subsection (b)(3) as a compliance 
State and, where appropriate, if its compliance status has been renewed 
pursuant to the terms of subsection (b)(4).
    ``(b) Determination of Compliance.--
            ``(1) State submission of certification.--Within 3 years of 
        being designated disaster-prone pursuant to section 701, each 
        disaster-prone State shall submit a certification to the 
        Director stating whether the State has--
                    ``(A) substantially complied with, and is 
                substantially enforcing, the multi-hazard building 
                codes provisions of section 702(a) and the flood 
                performance standards of section 702(b); and
                    ``(B) started implementing its mitigation plan, 
                including the specific processes described in section 
                703(b).
            ``(2) Review By Director.--The Director shall review each 
        certification submitted under paragraph (1) to determine 
        whether it is an accurate manifestation of the submitting 
        State's substantial compliance with, and enforcement of, the 
        hazard mitigation measures described in sections 702 and 703.
            ``(3) Compliance Determination.--If the Director determines 
        that the State certification is substantially accurate and the 
        State has substantially adopted and is substantially enforcing 
        and carrying out the applicable hazard mitigation measures 
        described in sections 702 and 703, the Director shall promptly 
        certify the State as a compliance State for purposes of 
        subsection (a). If the Director determines that the State 
        certification is substantially inaccurate, the Director shall 
        promptly return the certification submission to the State with 
        suggested changes for obtaining certification as a compliance 
        State.
            ``(4) Compliance renewal.--The Director shall review the 
        compliance with, and enforcement of, the applicable hazard 
        mitigation measures by each compliance State meeting the 
        requirements of subsection (a) not less than once every 2 years 
        and shall renew compliance certificates under the terms of 
        paragraph (3) as appropriate.
            ``(5) Regulations.--The Director shall issue final 
        regulations not later than 18 months after the date of the 
        enactment of the Natural Disaster Protection Act of 1993 
        describing the criteria to be used in determining whether a 
        State is a compliance State.
    (c) Penalties for Non-Compliance.--The following penalties shall 
become effective 5 years from the date of enactment of the Natural 
Disaster Protection Act of 1993:
            ``(1) No mitigation funds.--Funds from the Self-Sustaining 
        Mitigation Fund under section 705 shall not be made available 
        to any State which has not been certified as a compliance 
        State.
            ``(2) Higher premiums and deductibles.--Premium rates and 
        deductibles assessed under the Primary Insurance Program of 
        subtitle A of title VIII shall be increased, as determined by 
        the Director under the plan of operation of section 821 and 
        consistent with actuarially sound requirements of section 804, 
        for all policyholders residing in a State which has not been 
        certified as a compliance State.
            ``(3) No assistance or federal buildings.--No Federal 
        assistance shall be provided to any new Federal building or new 
        Federally leased, assisted, or regulated building covered under 
        Executive Order 11988 (``Floodplain Management'', May 24, 1977) 
        and Executive Order 12699 (``Seismic Safety of Federal and 
        Federally Assisted or Regulated New Building Construction'', 
        January 5, 1990) which is located in a State which has not been 
        certified as a compliance State.

``SEC. 705. SELF-SUSTAINING MITIGATION FUND.

    ``(a) Establishment.--
            ``(1) A percentage of the annual multi-hazard coverage 
        premiums collected under the Primary Insurance Program under 
        subtitle A of title VIII and the excess reinsurance premiums 
        collected under the Reinsurance Program under subtitle B of 
        title VIII shall be deposited, on a quarterly basis, in a 
        separate fund to be known as the Self-Sustaining Mitigation 
        Fund.
            ``(2) The Director shall set the percentage described in 
        paragraph (1) which shall be at least 5 percent, but shall not 
        exceed 10 percent, unless the Director determines that the 
        amounts in the Primary Insurance Program Fund established under 
        section 805 and the Reinsurance Fund established under section 
        815 are sufficient to provide for any probable expected losses 
        from future hurricanes, earthquakes, and volcanic eruptions.
            ``(3) Interest on amounts in the Self-Sustaining Mitigation 
        Fund shall be credited to the Fund.
    ``(b) Use.--Amounts in the Self-Sustaining Mitigation Fund shall be 
available, to the extent provided in appropriations Acts, to the 
Director to use as follows:
            ``(1) State support.--The Director shall provide amounts in 
        the Fund as financial assistance to each disaster-prone State, 
        unless 5 years from the date of enactment of the Natural 
        Disaster Protection Act of 1993 has passed and that State has 
        not been certified as a compliance State under section 704.
                    ``(A) Each State's share of such financial 
                assistance shall be based solely on a pro rata formula 
                of the Primary Insurance Program premiums collected 
                pursuant to subtitle A of title VIII from the 
                policyholders residing in that State.
                    ``(B) Such financial assistance shall be used by 
                disaster-prone States to support hazard mitigation 
                activities described in sections 702 and 703 and any 
                activities required by the Federal regulations issued 
                pursuant to section 404. Priority shall be given to 
                those hazard mitigation activities necessary to bring 
                the State into compliance with the building standards 
                of section 702, including the adequate enforcement of 
                such standards.
                    ``(C) Disaster-prone States shall transfer a 
                percentage, as established in Federal regulations, of 
                such financial assistance to local communities to 
                support activities necessary to ensure State compliance 
                with the hazard mitigation requirements of this title.
                    ``(D) The Director shall from time-to-time conduct 
                audits to ensure that disaster-prone States and local 
                communities are using such financial assistance to 
                support the hazard mitigation activities described in 
                subparagraphs (B) and (C).
            ``(2) Federal support.--A portion of the amounts in the 
        Self-Sustaining Mitigation Fund, as determined by the Director, 
        may be used to support Federal hazard mitigation and emergency 
        management activities described in section 404.
    ``(c) Federal Regulation.--Within 12 months of the date of 
enactment of the Natural Disaster Protection Act of 1993, the Director 
shall issue final Federal regulations, pursuant to the provisions of 
subchapter II of chapter 5 of title 5, United States Code, necessary to 
carry out this section.

``SEC. 706. NATURAL DISASTER MITIGATION AND PLANNING ADVISORY 
              COMMITTEE.

    ``(a) Establishment.--There is established an independent advisory 
committee within the executive branch to be known as the Natural 
Disaster Mitigation and Planning Advisory Committee (in this section 
referred to as the `Committee'). To the extent not contradicted by the 
provisions of this section, the Committee shall be subject to the 
provisions of the Federal Advisory Committee Act (5 U.S.C. Appendix 2). 
The establishment of the Committee shall not result in the creation of 
any new permanent staff or new office facilities.
    ``(b) Membership.--The Committee shall be composed of 20 members 
appointed by the Director. The members shall be chosen from among 
citizens of the United States and shall include--
            ``(1) 1 individual who is a metropolitan fire chief;
            ``(2) 1 individual who is a State fire marshal;
            ``(3) 1 individual who is a volunteer fire fighter;
            ``(4) 1 individual who is an organized labor representative 
        of the fire services;
            ``(5) 1 individual who is a search and rescue expert;
            ``(6) 1 individual who is a State director of emergency 
        medical services;
            ``(7) 1 individual who represents the interests of the 
        model building code bodies;
            ``(8) 1 individual who is a State emergency manager;
            ``(9) 1 individual who is a local emergency manager;
            ``(10) 1 individual who is a flood plain manager;
            ``(11) 1 individual who represents the interests of law 
        enforcement;
            ``(12) 1 individual who is an architect;
            ``(13) 1 individual who is a builder;
            ``(14) 1 individual who is a structural engineer;
            ``(15) 1 individual who represents a building trades labor 
        union;
            ``(16) 1 individual who is a recognized seismic hazard 
        mitigation expert;
            ``(17) 1 individual who is a recognized wind hazard 
        mitigation expert;
            ``(18) 1 individual who represents the interests of 
        consumers;
            ``(19) 1 individual who represents the private insurers; 
        and
            ``(20) 1 individual who represents the insurance agents.
    ``(c) Vacancies.--A vacancy on the Committee shall be filled in the 
manner in which the original appointment was made.
    ``(d) Chairperson.--The Director shall designate a chairperson of 
the Committee from among members selected for appointment to the 
Committee.
    ``(e) Selection.--Not later than 180 days after the date of the 
enactment of the Natural Disaster Protection Act of 1993 and after 
consulting with the State and local emergency management community, the 
Director shall appoint the members of the Committee.
    ``(f) Functions of the Committee.--The Committee shall advise the 
Director on hazard mitigation and disaster planning, including the 
development and implementation of the multi-hazard mitigation programs 
created pursuant to this title. The Committee shall review and comment 
on all draft Federal regulations issued by the Director pursuant to 
this title.
    ``(g) Responsibilities of the Director.--The Director shall fully 
cooperate with the Committee and provide the Committee with access to 
personnel and information as the Committee considers necessary to carry 
out its functions. The Director shall request comments from the 
Committee on any questions regarding operation of multi-hazard 
mitigation programs established under this title.''.

SEC. 6. FEDERAL INSURANCE PROGRAMS.

    The Robert T. Stafford Disaster Relief and Emergency Assistance Act 
(42 U.S.C. 5121 et seq.) is amended by adding after title VII as set 
forth above, the following new title:

                ``TITLE VIII--FEDERAL INSURANCE PROGRAMS

                ``Subtitle A--Primary Insurance Program

``SEC. 801. BASIC AUTHORITY AND PROGRAM OPERATION.

    ``(a) Establishment.--To carry out the purposes of this subtitle, 
the Director shall establish and carry out a national multi-hazard 
insurance program (in this title referred to as the `Primary Insurance 
Program') to provide insurance against loss resulting from physical 
damage to or loss of real property or personal property related 
thereto, in any State or States, arising from any earthquake and 
volcanic eruption (including any fire proximately caused by such 
volcanic eruption).
    ``(b) Implementation.--In carrying out the Primary Insurance 
Program, the Director shall arrange for participation, on other than a 
risk-sharing basis, by private insurers, insurance agents and brokers, 
insurance adjustment organizations, and other persons. The Director may 
take any actions reasonably necessary and appropriate to carry out this 
subtitle, including the making of contracts, the employment and 
compensation of persons, the acquisition of real and personal property, 
and the reasonable auditing of private insurers participating in the 
Primary Insurance Program limited to matters directly related to their 
participation in such program.
    ``(c) Insurance Practices.--Any actions of the Director under this 
subtitle shall be consistent with standard insurance practices and 
generally accepted accounting, actuarial, and underwriting principles.
    ``(d) Flood Insurance Study.--The Director shall evaluate the 
feasibility and benefits of including flood as a covered peril under 
the national multi-hazard insurance program. Such evaluation shall 
include an examination of whether to integrate existing flood insurance 
policies issued under the National Flood Insurance Act of 1968, as 
amended (42 U.S.C. 4001 et seq.), into the multi-hazard coverage policy 
issued under this subtitle. The Director shall submit a report, 
including any recommendations, to the Congress within 1 year of the 
date of enactment of the Natural Disaster Protection Act of 1993.
    ``(e) Improved Participation In Federal Flood Insurance Program.--
            ``(1) Notification requirement.--Agents and brokers or 
        private insurers participating in the Federal flood insurance 
        program pursuant to the National Flood Insurance Act, as 
        amended (42 U.S.C. 4001 et seq.), shall promptly notify the 
        Director of any policyholder who refuses to purchase Federal 
        flood insurance if such policyholder is required pursuant to 
        such Act to purchase such coverage as a condition of receiving 
        any Federal assistance for acquisition or construction of the 
        insured property and the agent, broker, or private insurer 
        knows of such requirement.
            ``(2) FEMA obligation.--
                    (A) General authority.--Within 180 days of 
                receiving a notification of any non-compliant 
                policholder as described in paragraph (1), the Director 
                shall take necessary and appropriate steps consistent 
                with the National Flood Insurance Act, as amended (42 
                U.S.C. 4001 et seq.), to assure said policyholder 
                purchases the required Federal flood insurance 
                coverage.
                    ``(B) Report to congress.--Within 180 days of 
                enactment of the Natural Disaster Protection Act of 
                1993, the Director shall submit a report to Congress of 
                any additional sanctions, or other measures, deemed 
                necessary and appropriate to assure policyholders 
                purchase the required Federal insurance coverage under 
                subparagraph (A).
            ``(3) Regulations.--Pursuant to the provisions of 
        subchapter II of chapter 5 of title 5, United States Code, the 
        Director shall issue any regulations necessary to carry out 
        this subsection.''.

``SEC. 802. SCOPE OF PROGRAM.

    ``(a) Eligible Properties.--In carrying out the Primary Insurance 
Program, the Director shall make multi-hazard coverage available only 
for residential properties that are located in earthquake and volcanic 
eruption-prone States as determined by section 701.
    ``(b) Additional Types of Properties.--If the Director makes an 
affirmative finding, in consultation with the Federal Insurance and 
Reinsurance Advisory Committee established pursuant to section 822, 
that the private insurance industry cannot adequately provide coverage 
to other types of properties, the Director may recommend to Congress 
that multi-hazard coverage under this subtitle be made available to 
cover other types of properties.

``SEC. 803. TERMS AND LIMITATIONS OF INSURANCE COVERAGE.

    ``(a) Terms.--Pursuant to the plan of operation established under 
section 821 and after consultation with the Federal Insurance and 
Reinsurance Advisory Committee established under section 822, the 
Director shall establish, by regulation, the general terms and 
conditions of insurability for properties eligible for multi-hazard 
coverage under section 802. Such regulations shall meet the 
requirements of this section and may include--
            ``(1) the type and locational classification of such 
        eligible properties;
            ``(2) specific insurability definitions for eligible 
        properties;
            ``(3) the specific types of damage that may be covered by 
        such insurance;
            ``(4) appropriate premium rates consistent with the 
        actuarial requirement of section 804;
            ``(5) appropriate loss-deductibles including variable 
        deductibles based on the existence of loss-reduction measures 
        that affect the risk of loss;
            ``(6) appropriate limits on coverage for each 
        classification of eligible properties;
            ``(7) appropriate minimum coverage amounts for each 
        classification of eligible properties, which may not be less 
        than the outstanding principal balance of the mortgage loan 
        securing the property or the maximum coverage limit for the 
        property under paragraph (6), whichever is less; and
            ``(8) any other terms and limitations relating to such 
        residential property insurance coverage that may be necessary 
        to carry out the purposes of this subtitle.
    ``(b) Hazards Covered.--The multi-hazard coverage under this 
subtitle shall cover any damage to covered eligible property, including 
debris removal, additional living expenses incurred as a result of 
direct damage to the premises, and ordinance and law coverage up to the 
policy limits set by subsection (a)(5) with additional ordinance and 
law coverage available pursuant to the plan of operation under section 
821, proximately caused by--
            ``(1) an earthquake, except for any fire proximately caused 
        by an earthquake;
            ``(2) a volcanic eruption, including any fire proximately 
        caused by a volcanic eruption; and
            ``(3) a tsunami associated with an earthquake or volcanic 
        eruption.
    ``(c) Program Participation.--Upon the issuance of regulations 
establishing the plan of operation under section 821, any private 
insurer may participate in the Primary Insurance Program regardless of 
whether such private insurer provides any insurance to residential 
property policyholders.
    ``(d) Obligations of Participating insurers.--Any private insurer 
electing to participate in the Primary Insurance Program shall provide 
to all its residential property policyholders for residential property 
determined to be eligible under subsection (a) and located in 
earthquake and volcanic eruption-prone States either--
            ``(1) the multi-hazard coverage under this subtitle, or
            ``(2) coverage on its own behalf that is equivalent to the 
        multi-hazard coverage provided under this subtitle at rates 
        established for the coverage under this subtitle.
    ``(e) Obligations of Non-Participating Insurers.--Any private 
insurer electing not to participate in the Primary Insurance Program 
shall notify, pursuant to regulations adopted by the Director, all of 
its residential policyholders in earthquake and volcanic eruption-prone 
States of its non-participation in such program, and of the absence of 
insurance and reinsurance protection for multi-hazard coverage under 
this title.

``SEC. 804. ACTUARIALLY SOUND RATES.

    ``(a) Establishment of Rates.--The Director shall from time-to-time 
establish and prescribe by regulation on a State, risk zone, or other 
appropriate basis, actuarially sound rates for types or classes of 
property eligible for multi-hazard coverage and the terms and 
conditions under which such rates apply.
    ``(b) Consultation.--In carrying out this section, the Director 
shall consult with the Federal Insurance and Reinsurance Advisory 
Committee established under section 822 and may enter into contracts, 
agreements, or other arrangements to utilize the services of the United 
States Geological Survey, the National Oceanic and Atmospheric 
Administration, and other relevant Federal, State, and local 
governmental agencies, and other persons.
    ``(c) Considerations.--The Director shall establish actuarially 
sound rates under this section based on--
            ``(1) considerations of the risks involved, including an 
        examination of any of the following factors which are deemed 
        relevant--
                    ``(A) the severity and frequency of earthquakes by 
                seismic zone and States in which the insured property 
                is located, including known differences in risks from 
                active faults and known susceptibility to landslide, 
                site amplification, and liquefaction;
                    ``(B) the risk of damage associated with a volcanic 
                eruption by volcanic zone and States in which the 
                insured property is located, including proximity to 
                known lava flows;
                    ``(C) the risk of damage associated with a tsunami 
                caused by an earthquake or volcanic eruption;
                    ``(D) the value of the insured property;
                    ``(E) the age of the structures located on the 
                insured property;
                    ``(F) the construction type of the structures 
                located on the insured property, including woodframe, 
                masonry, and masonry veneer;
                    ``(G) the architectural type of the structures 
                located on the insured property, including soft first 
                floor, box construction, and split level;
                    ``(H) hazard mitigation measures followed in the 
                construction or subsequent retrofitting of residential 
                property structures; and
                    ``(I) any other relevant criteria; and
            ``(2) application of accepted actuarial and rate-making 
        principles that reflect the risks involved, anticipated 
        insurance-related administrative and operating costs and loss 
        and loss-adjustment expense payments, contributions from the 
        Self-Sustaining Mitigation Fund established under section 705, 
        and provision for adequate reserves.
    ``(d) Minimization of Cross-Subsidization.--To the maximum extent 
practicable, the rates established under this section shall be 
actuarially sound and shall result in a minimum of cross-subsidization 
by reasonably reflecting the risk of damaging earthquakes, volcanic 
eruptions, and tsunamis, as appropriate, in total and for each 
subclassification of policyholders.
    ``(e) Actuarially Sound Requirement.--In setting and adjusting 
rates under this section, the Director shall provide that, over an 
extended period of time, expected expenditures from the Primary 
Insurance Program Fund under section 805(c) do not exceed expected 
receipts of the Primary Insurance Program Fund under section 805(b).
    ``(f) Limitations.--
            ``(1) To the maximum extent practicable, any rate 
        classification system developed by the Director to establish 
        actuarially sound rates under this section shall be--
                    ``(A) cost effective and shall not impose costs for 
                the initial establishment or the subsequent 
                administration of the rating plan that are 
                disproportionate to the size of the insurance premiums 
                collected; and
                    ``(B) simple and easy to understand, identify, and 
                use by insurance agents and policyholders.
            ``(2) The premiums collected under the Primary Insurance 
        Program shall not be used to establish highly specific 
        geographic rating zones and micro-zonation maps for the 
        earthquake, volcanic eruption, and tsunami perils.

``SEC. 805. PRIMARY INSURANCE PROGRAM FUND.

    ``(a) Establishment.--There is established in the Treasury of the 
United States the Primary Insurance Program Fund (in this section 
referred to as the `Insurance Fund') for the purpose of carrying out 
the Primary Insurance Program under this subtitle.
    ``(b) Credits of Fund.--The Insurance Fund shall be credited with--
            ``(1) insurance premiums received by the Director under the 
        Primary Insurance Program (less any amounts credited to the 
        Self-Sustaining Mitigation Fund under section 705) and interest 
        earned on premiums, as provided in subsection (e);
            ``(2) any amounts borrowed under section 806;
            ``(3) any amounts appropriated to the Insurance Fund; and
            ``(4) any interest earned on amounts invested under 
        subsection (d).
    ``(c) Uses of Fund.--Amounts in the Insurance Fund shall be 
available for--
            ``(1) payments for losses and loss adjustment expenses 
        under subsection (f);
            ``(2) payments for insurance company expense allowances 
        paid (including agents' commissions, State premium taxes, and 
        companies' administration expenses);
            ``(3) any and all administrative and operating expenses in 
        carrying out the Primary Insurance Program; and
            ``(4) principal and interest payments on amounts borrowed 
        under section 806 for supplemental losses, if any.
    ``(d) Investment of Amounts.--The Director may request the 
Secretary of the Treasury to invest any amount in the Primary Insurance 
Program Fund in obligations issued or guaranteed by the United States, 
as the Director considers appropriate.
    ``(e) Insurance Payments To Fund.--Private insurers issuing multi-
hazard coverage shall remit the premiums collected, less the insurers' 
expense allowances (as provided for in the plan of operation under 
section 821), to the Director on a quarterly basis 30 days after the 
end of the quarter, according to the procedures prescribed in the plan 
of operation. Such private insurers shall maintain a separate, 
interest-bearing account for the premiums to be submitted to the 
Director. The interest collected on this account shall be forwarded to 
the Insurance Fund with the premiums on a quarterly basis.
    ``(f) Reimbursement of Insurers.--
            ``(1) Requirement and procedure.--The Director shall 
        reimburse private insurers providing multi-hazard coverage 
        pursuant to this subtitle from amounts made available from the 
        Insurance Fund. Reimbursement for all claim payments up to and 
        including the policy limits of coverage and for all loss 
        adjustment expenses paid as a result of an earthquake, volcanic 
        eruption, or tsunami, as appropriate, shall be made as follows:
                    ``(A) The Director shall reimburse insurers within 
                30 days of the date any claim payments and loss 
                adjustment expense payments are made pursuant to the 
                Federal Government's obligations.
                    ``(B) If the gross reimbursements exceed amounts 
                available in the Insurance Fund, amounts borrowed from 
                the Treasury of the United States under section 806 
                shall cover the supplemental losses.
            ``(2) Regulations.--The Director may issue regulations 
        establishing the general method or methods by which proved and 
        approved claims for losses may be adjusted and paid for damages 
        covered by the multi-hazard coverage issued under this 
        subtitle. The claim practices of the Insurance Fund shall be 
        subject to and conform with any applicable State insurance 
        unfair trade practices statutes. Judicial review of a decision 
        of the Director regarding reimbursement of a private insurer 
        shall be available pursuant to section 821(e).
    ``(g) Obligations.--All multi-hazard coverage provided through the 
Primary Insurance Program under this subtitle shall constitute 
obligations of the United States. The full faith and credit of the 
United States is pledged for the full payment and performance of such 
obligations. The private insurers participating in the program shall 
bear no risk and shall assume no liability for the multi-hazard 
coverage provided through the program.
    ``(h) Status of Fund.--Any premiums collected for deposit in the 
Insurance Fund shall be exempt from all taxation now or hereafter 
imposed by the United States, by any territory, dependency or 
possession thereof, or by the State, county, municipality, or local 
taxing authority, except that the insurance policies issued by or in 
conjunction with the Federal Government pursuant to this title shall be 
subject, where applicable, to State insurance premium taxes.

``SEC. 806. BORROWING FROM TREASURY.

    ``(a) Authority.--To the extent that the accumulated assets, 
including any return on investments, in the Primary Insurance Program 
Fund established under section 805 are insufficient to pay claims and 
expenses, the Director shall issue, from time-to-time, to the Secretary 
of the Treasury, notes and other obligations to cover the 
insufficiency; except that the amounts of such obligations outstanding 
at any one time shall not exceed such sums as the Congress may provide 
acting upon the recommendation of the Director.
    ``(b) Interest Rate.--Obligations under subsection (a) shall bear 
interest at a rate determined by the Secretary of the Treasury, taking 
into consideration the current average market yield on outstanding 
marketable obligations of the United States of comparable maturities.
    ``(c) Deposits.--Any amounts borrowed by the Director under this 
section shall be deposited in the Primary Insurance Program Fund 
established under section 805.
    ``(d) Repayment.--Any amounts borrowed under this section shall be 
recouped, including interest on the borrowed funds, in future premiums 
for multi-hazard coverage pursuant to the plan of operation established 
under section 821. The Secretary of the Treasury shall grant extensions 
in repayment schedules that the Director advises the Secretary are 
necessary.

``SEC. 807. INSURANCE MITIGATION INCENTIVES.

    ``In carrying out the Primary Insurance Program under this subtitle 
and pursuant to the plan of operation established under section 821, 
the Director shall provide for the following insurance mitigation 
incentives which shall conform with the actuarially sound rate 
requirements of section 804:
            ``(1) Charging lower premiums or deductible amounts for any 
        residential property located in an earthquake-prone State which 
        meets the seismic building standards under section 702(a).
            ``(2) Charging lower premium rates or deductible amounts 
        for any residential property located in an earthquake-prone 
        State that passes a seismic safety inspection and meets the 
        requirements of the seismic mitigation standards established in 
        title VII.
            ``(3) Charging lower premium rates or deductible amounts 
        for new residential property not constructed in volcanic zones 
        in a volcanic eruption-prone State.

                   ``Subtitle B--Reinsurance Program

``SEC. 811. BASIC AUTHORITY AND PROGRAM OPERATION.

    ``(a) Eligibility.--
            ``(1) Provision of Coverage.--Upon the issuance of 
        regulations establishing the plan of operation under section 
        821, the Director shall make available to eligible entities 
        excess reinsurance coverage for any direct and indirect losses 
        under the covered lines set forth in section 813 that arise 
        from a hurricane, earthquake, volcanic eruption, or tsunami.
            ``(2) Eligible entities.--The following entities are 
        eligible to purchase the excess reinsurance coverage:
                    ``(A) Any private insurer participating in the 
                Primary Insurance Program under subtitle A.
                    ``(B) Any private reinsurer which reinsures any 
                private insurer participating in the Primary Insurance 
                Program under subtitle A.
                    ``(C) Any workers' compensation fund operated by a 
                State.
                    ``(D) Any State residual insurance pooling program.
    ``(b) Terms.--The reinsurance contracts issued by the Federal 
Government pursuant to this subtitle shall contain terms and conditions 
similar to those generally used in private catastrophic reinsurance 
contracts.
    ``(c) Judicial Review.--Judicial review of a decision of the 
Director regarding payment of claims shall be made available pursuant 
to section 821(e).
    ``(d) Single Entities.--Any private insurer and reinsurer companies 
or United States affiliates under the same ownership or management or 
part of the same holding company system, as determined under the plan 
of operation established under section 821, shall be considered a 
single entity for purposes of this subtitle.

``SEC. 812. LEVELS OF RETAINED LOSSES.

    ``(a) Industry-Wide Eligibility.--Excess reinsurance under this 
subtitle shall be available to all private insurers and private 
reinsurers eligible for reinsurance pursuant to section 811(a)(2) as 
follows:
            ``(1) Industry retained losses.--The Reinsurance Fund 
        established under section 815 shall provide excess reinsurance 
        when, as determined by the Director pursuant to the plan of 
        operation under section 821, the insurance industry is likely 
        to incur gross losses in the lines covered in section 813(a) 
        arising from hurricane, earthquake, volcanic eruption, and 
        tsunami events occurring during any 12-month period that exceed 
        15 percent of the consolidated industry surplus as regards 
        policyholders; provided that, only such separate events which 
        will likely result in industry gross losses of at least 
        $1,500,000,000, adjusted annually in accordance with the 
        percentage change in the Consumer Price Index, shall be 
        aggregated to reach the 15-percent level.
            ``(2) Individual company retained losses.--After the 
        insurance industry has sustained gross losses described in 
        paragraph (1), the Reinsurance Fund established under section 
        815 shall pay to an individual private insurer or private 
        reinsurer 95 percent of qualifying losses in excess of 15 
        percent of the consolidated surplus as regards policyholders of 
        the private insurer or private reinsurer.
    ``(b) Individual Insurer Eligibility.--
            ``(1) Individual insurer retained losses.--If subsection 
        (a) is not applicable, a private insurer or private reinsurer 
        shall be eligible for excess reinsurance coverage and 
        reimbursement from the Reinsurance Fund established under 
        section 815 if the insurer or reinsurer has incurred gross 
        losses from a single--
                    ``(A) earthquake, volcanic eruption, or tsunami 
                event that is included in the lines covered in section 
                813(a) and that exceeds 20 percent of the consolidated 
                surplus as regards policyholders of the private insurer 
                or private reinsurer; or
                    ``(B) hurricane event that is included in the lines 
                covered in section 813(a) and that exceeds 20 percent 
                of the consolidated surplus as regards policyholders of 
                the private insurer or private reinsurer, except that 
                the workers' compensation and earthquake lines of 
                coverage under section 813(a) shall be excluded.
            ``(2) Reinsurance fund payments.--After the private insurer 
        or private reinsurer has sustained gross losses described in 
        paragraph (1), the Reinsurance Fund established under section 
        815 shall pay 95 percent of qualifying losses, as defined in 
        subsection (d), in excess of 20 percent of the consolidated 
        surplus as regards policyholders of the private insurer or the 
        private reinsurer.
            ``(3) Limitation of reinsurance fund payments.--The 
        payments by the Reinsurance Fund under this subsection shall be 
        limited to 200 percent of the consolidated surplus as regards 
        policyholders of the private insurer or private reinsurer.
    ``(c) State Insurance Programs.--Excess reinsurance under this 
subtitle shall be available to each State workers' compensation program 
and State residual insurance pooling program eligible for reinsurance 
pursuant to section 811(a)(2) as follows:
            ``(1) Industry losses.--The Reinsurance Fund established 
        under section 815 shall provide excess reinsurance when, as 
        determined by the Director pursuant to the plan of operation 
        under section 821, the insurance industry is likely to incur 
        gross losses in the State served by the eligible State 
        insurance program arising from hurricane, earthquake, volcanic 
        eruption, and tsunami events occurring during any 12-month 
        period that exceed 10 times the sum of the direct earned 
        premiums for the lines of coverage described in sections 813(a) 
        (2), (3), (4), and (5) or $10,000,000,000, adjusted annually in 
        accordance with the percentage change in the Consumer Price 
        Index, whichever amount is less.
            ``(2) Minimum losses.--Such lessor amount described in 
        paragraph (1) must equal at least $500,000,000, adjusted 
        annually in accordance with the percentage change in the 
        Consumer Price Index.
            ``(3) Retained losses.--After the insurance industry has 
        sustained gross losses described in paragraph (1), the 
        Reinsurance Fund established under section 815 shall pay to an 
        individual State workers' compensation program or State 
        residual insurance pooling program 95 percent of qualifying 
        losses in excess of the lessor amount described in paragraph 
        (1).
    ``(d) Qualifying Losses.--For the purpose of this subtitle, 
``qualifying losses'' includes--
            ``(1) the losses and loss adjustment expenses incurred by a 
        private insurer, private reinsurer, State workers' compensation 
        fund, or State residual insurance pooling program, and
            ``(2) any assessments, surcharges, or other liabilities 
        imposed by any State residual insurance pooling program or 
        guaranty fund,
attributable to hurricanes, earthquakes, volcanic eruptions, and 
tsunamis occurring during any 12-month period encompassing the events 
described in subsections (a)(1) and (c)(1) or the event described in 
subsection (b)(1) reduced by--
            ``(1) any collectible reinsurance recoverable, and
            ``(2) an appropriate percentage of any uncollectible 
        reinsurance arising from the event as set in the plan of 
        operation to be issued by regulation under section 821.
    ``(e) Obligations.--All reinsurance contracts issued under this 
subtitle shall constitute obligations, in accordance with the terms of 
such reinsurance, of the United States. The full faith and credit of 
the United States is pledged for the full payment and performance of 
such obligations.
    ``(f) Definitions.--For purposes of this subtitle:
            ``(1) The term `consolidated industry surplus as regards 
        policyholders' means the consolidated surplus as regards 
        policyholders of the property and casualty insurance industry 
        (excluding life insurance) for the calendar year immediately 
        preceding the hurricane, earthquake, volcanic eruption, or 
        tsunami events described in subsection (a)(1) as determined by 
        the National Association of Insurance Commissioners or other 
        credible source and published annually in the Federal Register 
        by the Director.
            ``(2) The term `consolidated surplus as regards 
        policyholders' means the surplus as regards policyholders of 
        the private insurer, private reinsurer, or group of private 
        insurers and/or reinsurers (excluding life insurance) based on 
        financial data submitted to the National Association of 
        Insurance Commissioners or other credible source and published 
        annually in the Federal Register by the Director for the 
        calendar year immediately preceding the hurricane, earthquake, 
        volcanic eruption, or tsunami event or events described in 
        subsections (a)(1) and (b)(1).
            ``(3) The term `direct earned premiums' means the direct 
        earned premiums for certain lines of property and casualty 
        insurance coverage as published in the National Association of 
        Insurance Commissioners Fire and Casualty Annual Statement 
        filed with the applicable State department of insurance for the 
        most recent calendar year available preceding the hurricane, 
        earthquake, volcanic eruption, or tsunami events described in 
        subsection (c)(1).
            ``(4) The term `gross losses' means all losses and loss 
        adjustment expenses, prior to deducting any private reinsurance 
        recoverables.
            ``(5) The term `subject net written premium' means direct 
        and reinsurance premiums received by private insurers and 
        private reinsurers, less premiums paid for ceded reinsurance, 
        for all lines of coverage listed in section 313(a), except the 
        workers' compensation and earthquake lines of coverage shall be 
        excluded for the purposes of setting actuarially sound rates 
        for hurricanes.
            ``(6) The term `uncollectible reinsurance' means 
        reinsurance proceeds due and payable in accordance with the 
        terms of the reinsurance contract which are not paid within 12 
        months of the due date.

``SEC. 813. LINES OF INSURANCE.

    ``(a) Covered Lines.--The Director shall provide reinsurance 
coverage to private insurers, State workers' compensation funds and 
State residual insurance pooling programs for all of the following 
lines of insurance appearing in the National Association of Insurance 
Commissioners Fire and Casualty Annual Statement:
            ``(1) Fire.
            ``(2) Allied Lines.
            ``(3) Farmowners Multiple Peril.
            ``(4) Homeowners Multiple Peril.
            ``(5) Commercial Multiple Peril.
            ``(6) Ocean Marine.
            ``(7) Inland Marine.
            ``(8) Earthquake.
            ``(9) Workers' Compensation.
            ``(10) Other Liability.
            ``(11) Products Liability.
            ``(12) Aircraft (All Perils).
            ``(13) Glass.
            ``(14) Burglary and Theft.
            ``(15) Boiler and Machinery.
            ``(16) Reinsurance.
Reinsurance coverage must be purchased for all covered lines of 
insurance and in all affected hurricane, seismic, or volcanic rating 
zones in hurricane-prone, earthquake-prone, or volcanic eruption-prone 
States with the rates for such coverage set by the Director, pursuant 
to section 814.
    ``(b) Other Lines.--The Reinsurance Fund established under section 
815 shall provide reinsurance coverage to private reinsurers for all of 
the lines of insurance referred to in subsection (a) as well as other 
lines of insurance appearing in the National Association of Insurance 
Commissioners Fire and Casualty Annual Statement, as determined by the 
Director in the plan of operation pursuant to section 821 and in 
consultation with the Federal Insurance and Reinsurance Advisory 
Committee established under section 822.

``SEC. 814. ACTUARIALLY SOUND RATES.

    ``(a) Establishment.--Using generally accepted actuarial 
principles, the Director shall establish the rates for the excess 
reinsurance coverage and adjust the rates when necessary. To the 
maximum extent practicable, such rates shall be actuarially sound and 
shall result in a minimum of cross-subsidization, consistent with the 
infrequency of catastrophic hurricanes, earthquakes, volcanic 
eruptions, and tsunamis. In setting and adjusting the rates, the 
Director shall provide that, over an extended period of time, expected 
expenditures from the Reinsurance Fund under section 815(c) do not 
exceed expected receipts of the Reinsurance Fund under section 815(b).
    ``(b) Consultation.--In carrying out this section, the Director 
shall consult with the Federal Insurance and Reinsurance Advisory 
Committee established in section 822 and may enter into contracts, 
agreements, or other arrangements to utilize the services of the United 
States Geological Survey, the National Oceanic and Atmospheric 
Administration, and other relevant Federal, State, and local 
governmental agencies, and other persons.
    ``(c) Considerations--In setting or adjusting such actuarially 
sound rates, the Director shall provide for a minimum degree of cross-
subsidization among classes of reinsureds by reasonably reflecting the 
differences in risk of and vulnerability to loss from hurricanes, 
earthquakes, and volcanic eruptions that would be subject to payment 
from the Reinsurance Fund established under section 815, by giving due 
consideration to the following:
            ``(1) The premium rate volume of the reinsured by line of 
        insurance under section 813(a) by hurricane, seismic, or 
        volcanic zone or State in which the risks insured or reinsured 
        by the reinsurer are located.
            ``(2) The proportion of the total expected amount of 
        payments for qualifying losses and loss adjustment expenses by 
        line of insurance under section 813(a) by hurricane, seismic, 
        or volcanic zone or State expected for each reinsured.
            ``(3) The nature, scope, and adequacy of the private 
        reinsurance or retrocessional reinsurance purchased by the 
        private insurer, private reinsurer, State workers' compensation 
        fund, or State residual insurance pooling program in light of 
        its management expertise and the number, size, concentration, 
        and location of its risk exposures by lines of insurance under 
        section 813(a).
            ``(4) The payback of losses sustained by the Reinsurance 
        Fund established under section 815 due to payments made to a 
        private insurer, private reinsurer, State workers' compensation 
        fund, or State residual insurance pooling program.
            ``(5) The ratio between subject net written premium and 
        consolidated surplus as regards policyholders for each private 
        insurer and reinsurer during the most recent calendar year.
            ``(6) The nature of the risk for each private insurer and 
        reinsurer insured under coverages reported in the National 
        Association of Insurance Commissioners Fire and Casualty Annual 
        Statement filed with the applicable State department of 
        insurance for the most recent calendar year and covering the 
        lines of businesses listed in section 813(a).
    ``(d) Limitation.--Any rate classification system used by the 
Director under this section shall be cost-effective and shall not 
impose costs for the initial establishment or the subsequent 
administration of the rating plan that are disproportionate to the size 
of the insurance premiums collected.
    ``(e) Quarterly Payment.--Premiums paid to the Reinsurance Fund for 
reinsurance coverage under this subtitle shall be paid on a quarterly 
basis and shall be accumulated in the Reinsurance Fund, to be managed 
pursuant to section 815.

``SEC. 815. REINSURANCE FUND.

    ``(a) Establishment.--There is established in the Treasury of the 
United States the Reinsurance Fund for the purposes of carrying out the 
Reinsurance Program under this subtitle.
    ``(b) Credits of Fund.--The Reinsurance Fund shall be credited 
with--
            ``(1) any reinsurance premiums received by the Director 
        under the Reinsurance Program;
            ``(2) any amounts borrowed under section 816; and
            ``(3) any amounts earned under subsection (d).
    ``(c) Use of Fund.--The Reinsurance Fund shall be available to the 
Director for--
            ``(1) payments for qualifying losses under the Reinsurance 
        Program under this subtitle;
            ``(2) any and all administrative and operating expenses in 
        carrying out the Reinsurance Program; and
            ``(3) principal and interest payments on amounts borrowed 
        from the Treasury under section 816, if any.
    ``(d) Investment.--The Director shall request the Secretary of the 
Treasury to invest any amounts in the Reinsurance Fund in obligations 
issued or guaranteed by the United States, as the Director considers 
appropriate.
    ``(e) Status of Funds.--Any reinsurance premiums collected for 
deposit in the Reinsurance Fund shall be exempt from all taxation now 
or hereafter imposed by the United States, by any territory, dependency 
or possession thereof, or by any State, county, municipality, or local 
taxing authority.

``SEC. 816. BORROWING FROM TREASURY.

    ``(a) Authority.--To the extent that the accumulated assets, 
including any return on investments, in the Reinsurance Fund are 
insufficient to pay claims and expenses, the Director shall issue, from 
time-to-time, to the Secretary of the Treasury, notes and other 
obligations to cover the insufficiency; except that the amounts of such 
obligations outstanding at any one time shall not exceed such sums as 
the Congress may provide acting upon the recommendation of the 
Director.
    ``(b) Interest Rate.--Obligations under subsection (a) shall bear 
interest at a rate determined by the Secretary of the Treasury, taking 
into consideration the current average market yield on outstanding 
marketable obligations of the United States or comparable maturities.
    ``(c) Deposits.--Any amounts borrowed by the Director under this 
section shall be deposited in the Reinsurance Fund.
    ``(d) Repayment.--Any amounts borrowed pursuant to this section 
shall be recouped, including interest on the borrowed funds, in future 
rates for excess reinsurance coverage pursuant to the plan of operation 
established under section 821. The Secretary of the Treasury shall 
grant extensions in repayment schedules that the Director advises the 
Secretary are necessary.

                  ``Subtitle C--Program Administration

``SEC. 821. PLAN OF OPERATION.

    ``(a) Development.--The Director shall develop a plan of operation 
to ensure the fair, reasonable, and equitable administration of the 
Primary Insurance Program Fund established under section 805, the 
Reinsurance Fund established under section 815, and other activities 
under this title.
    ``(b) Contents.--The plan of operation shall set forth the specific 
policy and programmatic details for operating the Primary Insurance 
Program created under subtitle A and the Reinsurance Program created 
under subtitle B, including all guidelines, criteria, definitions, 
clarifications, and procedures necessary to carry out this title.
    ``(c) Establishment.--
            ``(1) Submission of draft to advisory committee.--Not later 
        than the expiration of the 12-month period beginning on the 
        date of the enactment of the Natural Disaster Protection Act of 
        1993, the Director shall submit a draft of the plan of 
        operation to the Federal Insurance and Reinsurance Advisory 
        Committee established under section 822. Before issuing any 
        regulations under paragraph (2), the Director shall consider 
        any recommendations made by such Advisory Committee regarding 
        the draft plan of operation.
            ``(2) Regulations.--Not later than the expiration of the 
        18-month period beginning on the date of the enactment of the 
        Natural Disaster Protection Act of 1993, the Director shall 
        issue final regulations establishing the plan of operation 
        under this section, subject to the provisions of subchapter II 
        of chapter 5 of title 5, United States Code. In issuing 
        regulations under this paragraph, the Director shall cause to 
        be published in the Federal Register a description of any 
        differences between the recommendations of the Federal 
        Insurance and Reinsurance Advisory Committee established under 
        section 822 and the regulations (including the guidelines, 
        criteria, definitions, clarifications, and procedures under the 
        plan) developed by the Director. The description shall contain, 
        for each such difference, an explanation of why the 
        recommendations of the Federal Insurance and Reinsurance 
        Advisory Committee were not included in the proposed 
        regulations.
            ``(3) Subsequent changes.--Any future changes to the plan 
        of operation shall be made in accordance with the process 
        described in paragraphs (1) and (2).
    ``(d) Additional Regulations.--In addition to the regulations 
establishing the plan of operation, the Director may issue any 
regulations necessary to carry out this title, pursuant to the 
provisions of subchapter II of chapter 5 of title 5, United States 
Code.
    ``(e) Suits.--Any lawsuits by or against the Director (or employees 
of the Federal Emergency Management Agency) in connection with 
activities under this title shall be brought in the district court of 
the United States with jurisdiction over the action, except that any 
action by an insurer or reinsurer against the Director (or employees of 
the Federal Emergency Management Agency) shall be brought in the United 
States District Court for the District of Columbia.

``SEC. 822. FEDERAL INSURANCE AND REINSURANCE ADVISORY COMMITTEE.

    ``(a) Establishment.--There is established an independent advisory 
committee within the executive branch to be known as the Federal 
Insurance and Reinsurance Advisory Committee (in this section referred 
to as the Committee). To the extent not contradicted by the provisions 
of this section, the Committee shall be subject to the provisions of 
the Federal Advisory Committee Act (5 U.S.C. Appendix 2). The 
establishment of the Committee shall not result in the creation of any 
new permanent staff or new office facilities.
    ``(b) Membership.--The Committee shall be composed of 7 members 
appointed by the Director. The members shall be chosen from among 
citizens of the United States and shall include--
            ``(1) 1 individual who represents the interests of 
        consumers;
            ``(2) 1 individual who is a State emergency planner;
            ``(3) 1 individual who is a State insurance commissioner;
            ``(4) 1 individual who represents the interests of the 
        private insurers;
            ``(5) 1 individual who represents the interests of the 
        private reinsurers;
            ``(6) 1 individual who represents the interests of the 
        insurance agents; and
            ``(7) 1 individual who is a professional actuary.
    ``(c) Vacancies.--A vacancy in the Commission shall be filled in 
the manner in which the original appointment was made.
    ``(d) Chairperson.--The Director shall designate a chairperson of 
the Committee from among members selected for appointment to the 
Committee.
    ``(e) Selection.--Not later than 180 days after the date of the 
enactment of the Natural Disaster Protection Act of 1993 and after 
consulting with the insurance industry and the State and local 
emergency management community, the Director shall appoint the members 
of the Committee.
    ``(f) Functions of the Committee.--The Committee shall review the 
draft plan of operation established under section 821. Within 120 days 
after receiving the draft plan of operation, the Committee shall submit 
to the Director written comments and recommendations for any changes to 
the plan. After regulations establishing the plan of operation have 
been issued, the committee shall submit a written report not less than 
once every 180 days to the Director and the Congress evaluating the 
operation of the Federal insurance programs established under this 
title and making recommendations for any actions relating to such 
programs. The Committee shall provide counsel to the Director regarding 
actuarial and insurance related services pursuant to sections 804(b) 
and 814(b). The Committee shall respond as soon as practicable to all 
requests of the Director made pursuant to subsection (g) or section 
821(c).
    ``(g) Responsibilities of the Director.--The Director shall fully 
cooperate with the Committee and provide the Committee with access to 
personnel and information as the Committee considers necessary to carry 
out its functions. The Director shall request comments from the 
Committee on any questions regarding operation of the Federal insurance 
programs established under this title.''.

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