II

103D CONGRESS

1ST SESSION S. 1350

To amend the Earthquake Hazards Reduction Act of 1977 to provide for

an expanded Federal program of hazard mitigation and insurance against

the risk of catastrophic natural disasters, such as hurricanes, earthquakes, and volcanic eruptions, and for other purposes.

IN THE SENATE OF THE UNITED STATES

AUGUST 4 (legislative day, JUNE 30), 1993

Mr. INOUYE (for himself, Mr. DODD, Mr. STEVENS, Mr. AKAKA, Mr. GORTON,

Mr. MURKOWSKI, and Mr. SIMON) introduced the following bill; which

was read twice and referred to the Committee on Commerce, Science, and

Transportation

A BILL

To amend the Earthquake Hazards Reduction Act of 1977

to provide for an expanded Federal program of hazard

mitigation and insurance against the risk of catastrophic

natural disasters, such as hurricanes, earthquakes, and

volcanic eruptions, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Natural Disaster

5 Protection Act of 1993’’.
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1 SEC. 2. FINDINGS.

2 Section 2 of the Earthquake Hazards Reduction Act

3 of 1977 (42 U.S.C. 7701) is amended by adding at the

4 end the following new paragraphs:

5 ‘‘(12) In addition to earthquakes, other cata6 strophic natural disasters, such as major hurricanes

7 and volcanic eruptions, will strike the United States

8 in the future and will inflict substantial long-term

9 consequences in terms of deaths, injuries, property

10 damages, and social and economic losses.

11 ‘‘(13) The country, and especially States, are

12 ill-equipped to respond to catastrophic natural disas13 ters.

14 ‘‘(14) Billions of dollars in taxpayer-supported

15 government assistance will be paid to rebuild follow16 ing catastrophic natural disasters.

17 ‘‘(15) Hazard mitigation can significantly and

18 cost-effectively reduce the long-term consequences of

19 natural disasters, especially for those least capable

20 of helping themselves, such as the elderly.

21 ‘‘(16) Hazard mitigation measures, such as

22 building codes, have proved effective in reducing

23 deaths, injuries, and property damage caused by cat24 astrophic natural disasters.
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1 ‘‘(17) Hazard mitigation measures, however,

2 are not in place in many high-hazard areas and are

3 not adequately enforced where they are in place.

4 ‘‘(18) First response capability, such as fire

5 fighting, emergency medical assistance, and search

6 and rescue personnel, is as important as hazard

7 mitigation in lessening the impact of natural disas8 ters.

9 ‘‘(19) Millions of Americans do not have ade10 quate insurance coverage to protect their property

11 from catastrophic natural disasters.

12 ‘‘(20) Recent catastrophic disasters (e.g., Hur13 ricanes Andrew and Iniki) have inflicted substantial

14 losses on private insurance companies which has lim15 ited their ability to write new coverages in the

16 stricken regions and other parts of the United

17 States.

18 ‘‘(21) These recent natural disasters have also

19 inflicted substantial losses on State and local govern20 ments, severely straining their budgets.

21 ‘‘(22) The recent flooding in the upper Mis22 sissippi River system has underscored the need to

23 improve the participation in the National Flood In24 surance Program, an existing Federal insurance pro25 gram that should be evaluated for possible coordina-
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1 tion with and inclusion in the multihazard program

2 created by the Natural Disaster Protection Act of

3 1993.’’.

4 SEC. 3. PURPOSE.

5 Section 3 of the Earthquake Hazards Reduction Act

6 of 1977 (42 U.S.C. 7702) is amended—

7 (1) by inserting ‘‘(a) EARTHQUAKE HAZARD

8 REDUCTION.—’’ before ‘‘It is the purpose’’; and

9 (2) by adding at the end the following new

10 subsection:

11 ‘‘(b) NATURAL DISASTER, RELIEF, AND INSUR12 ANCE.—It is the purpose of the Congress to reduce deaths,

13 injuries, and property damage from natural disasters

14 through a hazard mitigation program and to ensure that

15 all Americans in all 50 States have adequate multihazard

16 insurance coverage. The objectives of the program shall

17 include—

18 ‘‘(1) the building of safer structures and the

19 upgrading of existing buildings and lifelines;

20 ‘‘(2) the enhancement of State and local com21 munity emergency management;

22 ‘‘(3) the improvement of State and local emer23 gency first response capability, including the devel24 opment of standards and guidelines for staffing, op25 erations, and training;
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1 ‘‘(4) the forging of a partnership with the Fed2 eral Government that makes the States and localities

3 ultimately responsible for implementing and enforc4 ing multihazard mitigation measures and emergency

5 management;

6 ‘‘(5) the creation of a self-sustaining funding

7 mechanism to help States pay for mitigation efforts;

8 ‘‘(6) the provision of coverage for natural perils

9 together with standard insurance policies;

10 ‘‘(7) the establishment of premium rates based

11 on risk so that if the State or locality has no dis12 cernible hazard for a particular peril, little or no

13 premium would be collected for that risk;

14 ‘‘(8) the assurance that the insurance industry

15 makes a substantial contribution in paying losses

16 and continues to provide coverage following a cata17 strophic natural disaster;

18 ‘‘(9) the employment of the insurance industry

19 as part of a private-sector partnership with the gov20 ernment to speed rebuilding following a catastrophic

21 natural disaster; and

22 ‘‘(10) the saving of taxpayer money through a

23 self-funded hazard mitigation and insurance pro24 gram that will reduce reliance on government disas25 ter assistance.’’.
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1 SEC. 4. DEFINITIONS.

2 Section 4 of the Earthquake Hazards Reduction Act

3 of 1977 (42 U.S.C. 7703) is amended by adding at the

4 end the following new paragraphs:

5 ‘‘(8) The term ‘critical facilities’ means schools

6 and structures essential to emergency services nec7 essary for post-natural disaster recovery, including—

8 ‘‘(A) hospitals;

9 ‘‘(B) fire and police facilities;

10 ‘‘(C) temporary shelters; and

11 ‘‘(D) emergency operating and prepared12 ness centers.

13 ‘‘(9) The term ‘Director’ means the Director of

14 the Federal Emergency Management Agency.

15 ‘‘(10) The term ‘disaster-prone State’ means a

16 State determined by the Director pursuant to sec17 tion 201 to be a hurricane-prone, windstorm-prone,

18 earthquake-prone, volcanic eruption-prone, or flood19 prone State.

20 ‘‘(11) The term ‘earthquake’ means any shak21 ing or trembling of the crust of the Earth caused by

22 underground seismic forces or by breaking and shift23 ing of rock beneath the surface.

24 ‘‘(12) The term ‘earthquake-prone State’ means

25 a State determined by the Director pursuant to sec-
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1 tion 201 to have an exposure to the earthquake

2 peril.

3 ‘‘(13) The term ‘Federal agency’ means any de4 partment, agency, corporation, or other instrumen5 tality of the executive branch of the Federal Govern6 ment, and includes the Federal National Mortgage

7 Association and the Federal Home Loan Mortgage

8 Corporation.

9 ‘‘(14) The term ‘Federal assistance’ means any

10 form of financial aid, including grants, loans, loan11 guarantees, subsidies, insurance, and payments, pro12 vided by a Federal agency.

13 ‘‘(15) The term ‘first responder’ means fire

14 fighting, police, and emergency medical personnel

15 with the statutory authority to engage in, and pro16 vide immediate emergency response services.

17 ‘‘(16) The term ‘flood’ or ‘flooding’ means a

18 general and temporary condition of partial or com19 plete inundation of normally dry land areas from the

20 overflow of inland or tidal waters or the unusual and

21 rapid accumulation of runoff of surface waters from

22 any source.

23 ‘‘(17) The term ‘flood-prone State’ means a

24 State determined by the Director pursuant to sec25 tion 201 to have an exposure to the flood peril.
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1 ‘‘(18) The term ‘hurricane’ means a non-fron2 tal, warm core, low pressure atmospheric system

3 having a definite organized circulation, including any

4 associated windstorm events occurring within 72

5 hours before and after the hurricane, with sustained

6 wind speeds of 74 miles per hour or greater and offi7 cially declared to a be a hurricane by the National

8 Hurricane Center.

9 ‘‘(19) The term ‘hurricane-prone State’ means

10 a State determined by the Director pursuant to sec11 tion 201 to have an exposure to the hurricane peril.

12 ‘‘(20) The term ‘hurricane zone’ means an area

13 within a State identified by the Director as being

14 subject to major risk from the hurricane peril.

15 ‘‘(21) The term ‘insurance industry’ means all

16 private insurers and private reinsurers.

17 ‘‘(22) The term ‘local community’ means a po18 litical subdivision of a State which has zoning and

19 building code jurisdiction over a particular area

20 which is exposed to the hurricane, windstorm, earth21 quake, volcanic eruption, or flood peril.

22 ‘‘(23) The term ‘multihazard coverage’ means

23 policies, riders, or endorsements of insurance issued

24 on Federal paper pursuant to subtitle A of title III
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1 that provide indemnity, in whole or in part, for the

2 loss, destruction, or damage of residential property.

3 ‘‘(24) The term ‘ordinance or law coverage’

4 means insurance coverage for the increased cost of

5 construction to repair or rebuild structures and the

6 cost of demolition due to the enforcement of any or7 dinance or law, such as building codes.

8 ‘‘(25) The terms ‘private insurer’ and ‘private

9 reinsurer’ mean any insurer or reinsurer that is—

10 ‘‘(A)(i) licensed or admitted to write prop11 erty and casualty insurance or reinsurance

12 within a State; or

13 ‘‘(ii) a branch of an insurer or reinsurer

14 organized or incorporated in a country other

15 than the United States that is entered through

16 and licensed by a State to conduct insurance or

17 reinsurance business; or

18 ‘‘(B) in the case of an insurance exchange

19 or group of unincorporated underwriters, the

20 term means an underwriting syndicate, notwith21 standing the licensed or admitted status of the

22 insurance exchange or group of unincorporated

23 underwriters.

24 ‘‘(26) The term ‘residential property’ means—
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1 ‘‘(A) a 1- to 4-family residential structure

2 (including a mobile or manufactured home) and

3 the personal property therein; and

4 ‘‘(B) personal property of the occupants of

5 a residential structure (including a condomin6 ium, cooperative, and apartment structure).

7 ‘‘(27) The term ‘seismic zone’ means an area

8 within a State identified by the Director as being

9 subject to major risk from earthquake peril.

10 ‘‘(28) The term ‘State residual insurance pool11 ing program’ means any State-authorized joint un12 derwriting or joint reinsurance association, risk pool,

13 residual market mechanism, or other type of State14 sanctioned entity providing property insurance cov15 erage against hurricanes, earthquakes, volcanic

16 eruptions, or tsunamis.

17 ‘‘(29) The term ‘substantially modified building

18 construction’ means an addition or improvement to

19 an existing structure that constitutes at least a 50

20 percent increase in the overall value of the structure.

21 ‘‘(30) The term ‘supplemental losses’ means

22 claim and loss adjustment expense payments for the

23 multihazard coverage issued pursuant to subtitle A

24 of title III that exceed the accumulated amounts in

25 the Primary Insurance Program Fund.
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1 ‘‘(31) The term ‘tsunami’ means an ocean wave

2 generated by underwater disturbances in the crust of

3 the Earth, primarily earthquakes and submarine vol4 canic eruptions.

5 ‘‘(32) The term ‘volcanic eruption’ means the

6 expulsion, as a result of natural causes, of molten

7 rock, rock fragments, gases, ashes, mud, lava flows,

8 and other natural substances through an opening in

9 the crust of the Earth.

10 ‘‘(33) The term ‘volcanic eruption-prone State’

11 means a State determined by the Director pursuant

12 to section 201 to have an exposure to the volcanic

13 eruption peril.

14 ‘‘(34) The term ‘volcanic zone’ means an area

15 within a State identified by the Director as being

16 subject to major risk from the volcanic eruption

17 peril.

18 ‘‘(35) The term ‘windstorm’ means an atmos19 pheric disturbance marked by high velocity move20 ments of air, such as a tornado, but does not include

21 a hurricane.

22 ‘‘(36) The term ‘windstorm-prone State’ means

23 a State determined by the Director pursuant to sec24 tion 201 to have an exposure to the windstorm

25 peril.’’.
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1 SEC. 5. CONFORMING AMENDMENTS.

2 The Earthquake Hazards Reduction Act of 1977 (42

3 U.S.C. 7701 et seq.) is amended—

4 (1) in section 4(2)—

5 (A) by inserting after ‘‘The term ‘Pro6 gram’ ’’ the following: ‘‘, as used in title I,’’;

7 and

8 (B) by striking ‘‘section 5’’ and inserting

9 ‘‘section 101’’;

10 (2) by inserting after section 4 the following

11 heading:

12 ‘‘TITLE I—EARTHQUAKE HAZ13 ARDS REDUCTION PRO14 GRAM’’;

15 (3) by redesignating sections 5, 6, 7, 8, 9, 10,

16 11, and 12 as sections 101, 102, 103, 104, 105,

17 106, 107, and 108 respectively;

18 (4) in sections 101, 103, 105, 106, and 108 (as

19 redesignated by paragraph (3)), by striking ‘‘this

20 Act’’ each place it appears and inserting ‘‘this title’’;

21 and

22 (5) in section 108 (as redesignated by para23 graph (3))—

24 (A) by striking ‘‘sections 5 and 6’’ each

25 place it appears and inserting ‘‘sections 101

26 and 102’’; and
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1 (B) by striking ‘‘section 11’’ and inserting

2 ‘‘section 107’’.

3 SEC. 6. MULTIHAZARD MITIGATION PROGRAM.

4 The Earthquake Hazards Reduction Act of 1977 (42

5 U.S.C. 7701 et seq.) is amended by adding at the end

6 the following new title:

7 ‘‘TITLE II—MULTIHAZARD

8 MITIGATION PROGRAM

9 ‘‘SEC. 201. IDENTIFICATION AND DESIGNATION OF DISAS10 TER-PRONE STATES.

11 ‘‘(a) INITIAL IDENTIFICATION.—The Director shall

12 identify States that are prone to damages from—

13 ‘‘(1) hurricanes;

14 ‘‘(2) windstorms;

15 ‘‘(3) earthquakes;

16 ‘‘(4) volcanic eruptions; and

17 ‘‘(5) flooding.

18 ‘‘(b) DESIGNATION BY PERIL.—Not later than 1 year

19 after the date of enactment of the Natural Disaster Pro20 tection Act of 1993, the Director shall—

21 ‘‘(1) designate the States identified pursuant to

22 subsection (a) as disaster-prone States;

23 ‘‘(2) separately designate States as hurricane24 prone, windstorm-prone, earthquake-prone, volcanic

25 eruption-prone, or flood-prone, as appropriate; and
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1 ‘‘(3) publish a list of the designated States in

2 the Federal Register and in widely circulated local

3 newspapers in the applicable States.

4 ‘‘(c) FINAL NOTIFICATION.—The designation for

5 each State under subsection (b) shall become final for the

6 purposes of this Act 6 months after the date on which

7 the designations are published in the Federal Register.

8 The Director shall notify the chief executive officer of each

9 designated State, in writing, before the expiration of the

10 6-month period.

11 ‘‘(d) ONGOING DESIGNATION AND NOTIFICATION.—

12 Based upon any additional hurricane, windstorm, seismic,

13 volcanic, or flood information that from time-to-time be14 comes available, the Director may designate a State (not

15 designated under subsection (b)) having an exposure to

16 hurricane, windstorm, earthquake, volcanic eruption, or

17 flood perils. Any such State shall be designated pursuant

18 to the terms of subsection (b) and notified pursuant to

19 terms of subsection (c).

20 ‘‘(e) APPEAL.—

21 ‘‘(1) IN GENERAL.—A State aggrieved by a

22 final determination as a disaster-prone State, pursu23 ant to subsection (c) or (d), may, after exhausting

24 administrative remedies, appeal the determination to

25 any United States district court for a district located
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1 within the State, not later than 60 days after receipt

2 of notice of such determination.

3 ‘‘(2) SCOPE OF REVIEW.—The scope of review

4 by the court shall be as provided under chapter 7 of

5 title 5, United States Code.

6 ‘‘(3) EFFECT OF DETERMINATION DURING

7 PENDENCY OF APPEAL.—During the pendency of an

8 appeal under this subsection, a determination of the

9 Director shall be effective and final for the purposes

10 of this title unless stayed by the court for good

11 cause shown.

12 ‘‘SEC. 202. BUILDING AND SAFETY STANDARDS.

13 ‘‘(a) MULTIHAZARD BUILDING AND SAFETY

14 CODES.—The Governor of each State designated as a hur15 ricane-prone State, a windstorm-prone State, or an earth16 quake-prone State, shall—

17 ‘‘(1) for all new and substantially modified

18 building construction in that State, adopt the rel19 evant natural disaster hazard mitigation portions of

20 the newest edition of the National Building Code,

21 the Standard Building Code, or the Uniform Build22 ing Code, and other relevant building and housing

23 codes and standards, including the national consen24 sus safety codes of the National Fire Protection As25 sociation (the National Electrical Code, the National
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1 Fuel Gas Code, the Flammable and Combustible

2 Liquids Code, and the Standard for the Storage and

3 Handling of Liquified Petroleum Gases); or

4 ‘‘(2) certify that the local communities of the

5 State have adopted and are enforcing building codes

6 which meet or exceed the minimum natural disaster

7 hazard mitigation portions of any of the 3 model

8 building codes and other building and housing codes

9 and standards described in paragraph (1) for all new

10 and substantially modified building construction in

11 that State.

12 ‘‘(b) FLOOD PERFORMANCE STANDARDS.—Each

13 State designated as a flood-prone State shall—

14 ‘‘(1) adopt the relevant flood minimum per15 formance standards, flood-proofing, and other flood

16 protection measures authorized under the National

17 Flood Insurance Act of 1968 (42 U.S.C. 4001 et

18 seq.), that minimize flood damage for new and sub19 stantially modified building construction located in

20 flood-prone local communities; or

21 ‘‘(2) certify that the flood-prone local commu22 nities of the State have adopted and are enforcing

23 the minimum performance standards described in

24 paragraph (1) for new and substantially modified

25 building construction.
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1 ‘‘SEC. 203. STATE MITIGATION PLANS.

2 ‘‘(a) GENERAL AUTHORITY.—Each State designated

3 as a disaster-prone State shall—

4 ‘‘(1) develop a mitigation plan that establishes

5 the plan of the State with accompanying schedules

6 for improving the ability of the State to reduce the

7 hazards of future natural disasters, such as hurri8 canes, windstorms, earthquakes, volcanic eruptions,

9 or floods; or

10 ‘‘(2) designate an existing mitigation plan that

11 includes the processes described in subsection (b).

12 ‘‘(b) CONTENT.—Each State mitigation plan shall in13 clude a process for—

14 ‘‘(1) verifying compliance with the multihazard

15 building and safety codes described in section 202(a)

16 and the flood performance standards described in

17 section 202(b) to ensure the building standards are

18 being enforced;

19 ‘‘(2) identifying, consistent with the National

20 Flood Insurance Act of 1968 (42 U.S.C. 4001 et

21 seq.), the areas within the State that have some risk

22 from the hazards of natural disasters, including hur23 ricanes, windstorms, earthquakes, volcanic eruptions,

24 and floods, and further categorizing at-risk areas

25 based on the degree of risk;
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1 ‘‘(3) establishing priorities, by risk and location,

2 of the types of structures, including State buildings,

3 lifelines, and critical facilities, that may need hazard

4 mitigation;

5 ‘‘(4) identifying the hazard mitigation meas6 ures, such as building codes, nonstructural mitiga7 tion, and retrofitting, for each of the natural disas8 ter perils, that are most cost-effective and most like9 ly to prevent personal injury and reduce property

10 loss;

11 ‘‘(5) improving the emergency response to natu12 ral disasters, that shall include capabilities for fire

13 fighting, search and rescue, and the provision of

14 shelters, communications, and medical relief;

15 ‘‘(6) expediting the rebuilding of lifelines and

16 recovery by individuals and the business and com17 mercial sectors of the State;

18 ‘‘(7) encouraging the development of local com19 munity-based hazard mitigation plans;

20 ‘‘(8) achieving compliance with, and enforce21 ment of, the Federal multihazard mitigation stand22 ards or requirements set forth in regulations pro23 mulgated by the Director pursuant to this Act; and
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1 ‘‘(9) developing standards and guidelines for

2 the safe staffing, operation, and regular training of

3 first responders for disaster emergency mitigation.

4 ‘‘(c) SUBMISSION OF STATE MITIGATION PLANS TO

5 FEMA.—Not later than 2 years after being designated

6 disaster-prone pursuant to section 201, each disaster7 prone State shall submit a completed mitigation plan to

8 the Director.

9 ‘‘SEC. 204. COMPLIANCE BY STATES.

10 ‘‘(a) DEFINITION OF COMPLIANCE STATE.—A disas11 ter-prone State shall be considered a compliance State for

12 purposes of this title, if—

13 ‘‘(1) not later than 5 years after the date of en14 actment of the Natural Disaster Protection Act of

15 1993, the State is certified under subsection (b)(3)

16 as a compliance State; and

17 ‘‘(2) where appropriate, if the compliance status

18 of the State has been renewed pursuant to sub19 section (b)(4).

20 ‘‘(b) DETERMINATION OF COMPLIANCE.—

21 ‘‘(1) STATE SUBMISSION OF CERTIFICATION.—

22 Not later than 3 years after being designated disas23 ter-prone pursuant to section 201, each disaster24 prone State shall certify to the Director that the

25 State has—
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1 ‘‘(A) substantially complied with, and is

2 substantially enforcing, the multihazard build3 ing code under section 202(a) and the flood

4 performance standards under section 202(b);

5 and

6 ‘‘(B) started implementing the mitigation

7 plan of the State, including the processes de8 scribed in section 203(b).

9 ‘‘(2) REVIEW BY DIRECTOR.—The Director

10 shall review each certification submitted under para11 graph (1) to determine whether it is an accurate

12 manifestation of substantial compliance with, and

13 enforcement of, the hazard mitigation measures de14 scribed in sections 202 and 203.

15 ‘‘(3) COMPLIANCE DETERMINATION.—

16 ‘‘(A) SUBSTANTIAL COMPLIANCE.—If the

17 Director determines that the State certification

18 is substantially accurate and the State has sub19 stantially adopted and is substantially enforcing

20 and carrying out the applicable hazard mitiga21 tion measures described in sections 202 and

22 203, the Director shall promptly certify the

23 State as a compliance State for purposes of

24 subsection (a).
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1 ‘‘(B) NONCOMPLIANCE.—If the Director

2 determines that the State certification is sub3 stantially inaccurate, the Director shall prompt4 ly return the certification submission to the

5 State with suggested changes for obtaining cer6 tification as a compliance State.

7 ‘‘(4) COMPLIANCE RENEWAL.—The Director

8 shall review the compliance with, and enforcement

9 of, the applicable hazard mitigation measures by

10 each compliance State meeting the requirements of

11 subsection (a) not less often than once every 2 years

12 and shall renew compliance certificates under the

13 terms of paragraph (3) as appropriate.

14 ‘‘(5) REGULATIONS.—Not later than 18 months

15 after the date of the enactment of the Natural Dis16 aster Protection Act of 1993, the Director shall

17 issue final regulations describing the criteria to be

18 used in determining whether a State is a compliance

19 State.

20 ‘‘(c) PENALTIES FOR NONCOMPLIANCE.—

21 ‘‘(1) STATE PENALTIES.—On the date that is 5

22 years after the date of enactment of the Natural

23 Disaster Protection Act of 1993—

24 ‘‘(A) funds from the Self-Sustaining Miti25 gation Fund under section 206 shall not be
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1 made available to any State that has not been

2 certified as a compliance State;

3 ‘‘(B) premium rates and deductibles as4 sessed under the Primary Insurance Program

5 of subtitle A of title III shall be increased, as

6 determined by the Director pursuant to the

7 plan of operation developed under section 321

8 and consistent with actuarially sound require9 ments of section 304, for all policyholders resid10 ing in a State that has not been certified as a

11 compliance State; and

12 ‘‘(C) no Federal assistance shall be pro13 vided to any new Federal building or new Fed14 erally leased, assisted, or regulated building

15 covered under Executive Order 11988 (‘Flood16 plain Management’, May 24, 1977) and Execu17 tive Order 12699 (55 Fed. Reg. 835; relating

18 to seismic safety of Federal and federally as19 sisted or regulated new building construction),

20 that is located in a State that has not been cer21 tified as a compliance State.

22 ‘‘(2) LOCAL COMMUNITY PENALTY.—No public

23 assistance disaster funds under sections 405 and

24 406 of the Robert T. Stafford Disaster Relief and

25 Emergency Assistance Act (42 U.S.C. 5172, 5173),
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1 shall be provided to any local community that has

2 failed to comply with the multihazard building code

3 described in section 202(a) and the flood perform4 ance standards described in section 202(b) on the

5 date that is 5 years after the date of enactment of

6 the Natural Disaster Protection Act of 1993.

7 ‘‘SEC. 205. FEDERAL HAZARD MITIGATION AUTHORITIES.

8 ‘‘(a) FEDERAL EMERGENCY MANAGEMENT AGEN9 CY.—The Director shall develop programs to carry out the

10 following multihazard mitigation and emergency manage11 ment initiatives:

12 ‘‘(1) The development of model building codes

13 and other hazard mitigation measures for cata14 strophic natural disasters, such as hurricanes, wind15 storms, earthquakes, volcanic eruptions, or floods,

16 that are based on both preventing personal injuries

17 and mitigating property damage.

18 ‘‘(2) Adequate training and licensing of archi19 tects, engineers, building inspectors, building code

20 enforcement personnel, planners, and similar profes21 sionals to ensure proper compliance with hazard

22 mitigation standards.

23 ‘‘(3) Expanded research to strengthen building

24 codes and promote development of cost-effective
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1 building technologies and related hazard mitigation

2 measures.

3 ‘‘(4) The transfer of hazard mitigation tech4 nology to States, local communities, and other enti5 ties, such as private building contractors, responsible

6 for the implementation and enforcement of hazard

7 mitigation measures.

8 ‘‘(5) Aid for Federal, State, and local emer9 gency response operations following natural disasters

10 that may include the acquisition of additional facili11 ties, equipment, personnel, and resources for train12 ing and public assistance.

13 ‘‘(6) Education to enhance public awareness of

14 the risk of and hazards from natural disasters and

15 ways to mitigate personal, physical, and economic

16 loss.

17 ‘‘(b) FEDERALLY CONNECTED BUILDINGS.—All new

18 buildings owned or leased by any Federal agency or receiv19 ing Federal assistance shall meet the newest edition of the

20 relevant building code requirements, including relevant

21 building and housing codes and performance building

22 standards.

23 ‘‘(c) FEDERAL REGULATIONS.—Not later than 18

24 months after the date of enactment of the Natural Disas25 ter Protection Act of 1993, the Director, in coordination
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1 with other Federal agencies, shall issue final multihazard

2 mitigation regulations necessary to carry out the hazard

3 mitigation activities described in subsections (a) and (b).

4 Such regulations shall be issued pursuant to the provisions

5 of subchapter II of chapter 5 of title 5, United States

6 Code.

7 ‘‘SEC. 206. SELF-SUSTAINING MITIGATION FUND.

8 ‘‘(a) ESTABLISHMENT.—

9 ‘‘(1) SOURCE OF FUNDS.—A percentage of the

10 annual multihazard coverage premiums collected

11 under the Primary Insurance Program under sub12 title A of title III and the excess reinsurance pre13 miums collected under the Reinsurance Program

14 under subtitle B of title III shall be deposited, on a

15 quarterly basis, in a separate fund to be known as

16 the Self-Sustaining Mitigation Fund.

17 ‘‘(2) PERCENTAGE.—The Director shall set the

18 percentage described in paragraph (1) at a level that

19 is at least 5 percent of the applicable funds, but not

20 more than 10 percent, unless the Director deter21 mines that the amounts in the Primary Insurance

22 Program Fund established under section 305 and

23 the Reinsurance Fund established under section 315

24 are sufficient to provide for any probable expected
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1 losses from future hurricanes, earthquakes, and vol2 canic eruptions.

3 ‘‘(3) INTEREST.—Interest on amounts in the

4 Self-Sustaining Mitigation Fund shall be credited to

5 the Fund.

6 ‘‘(b) USE.—Amounts in the Self-Sustaining Mitiga7 tion Fund shall be available, to the extent provided in ap8 propriations Acts, to the Director to use as follows:

9 ‘‘(1) STATE SUPPORT.—The Director shall pro10 vide amounts in the Fund to each disaster-prone

11 State, unless the State has not been certified as a

12 compliance State under section 204 on the date that

13 is 5 years after the date of enactment of the Natural

14 Disaster Protection Act of 1993.

15 ‘‘(A) ALLOCATION.—Funds shall be made

16 available to a State under this section on a pro

17 rata formula of the Primary Insurance Pro18 gram premiums collected pursuant to subtitle A

19 of title III from the policyholders residing in

20 the State.

21 ‘‘(B) USE OF FUNDS.—Funds made avail22 able to a State under this section shall be used

23 to support hazard mitigation activities described

24 in sections 202 and 203 and any activities re25 quired by the Federal regulations issued pursu-
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1 ant to section 205. Priority shall be given to

2 hazard mitigation activities that are necessary

3 to bring the State into compliance with the

4 building standards of section 202, including the

5 adequate enforcement of the standards.

6 ‘‘(C) TRANSFER OF FUNDS.—Each disas7 ter-prone State shall transfer a percentage, as

8 established in regulations, of such financial as9 sistance to local communities to support activi10 ties necessary to ensure State compliance with

11 the hazard mitigation requirements of this title.

12 ‘‘(D) AUDITS.—The Director shall from

13 time-to-time conduct audits to ensure that dis14 aster-prone States and local communities are

15 using such financial assistance to support the

16 hazard mitigation activities described in sub17 paragraphs (B) and (C).

18 ‘‘(2) FEDERAL SUPPORT.—A portion of the

19 amounts in the Self-Sustaining Mitigation Fund, as

20 determined by the Director, may be used to support

21 Federal hazard mitigation and emergency manage22 ment activities described in section 205.

23 ‘‘(c) FEDERAL REGULATION.—Not later than 12

24 months after the date of enactment of the Natural Disas25 ter Protection Act of 1993, the Director shall issue final
28

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1 Federal regulations, pursuant to subchapter II of chapter

2 5 of title 5, United States Code, necessary to carry out

3 this section.

4 ‘‘SEC. 207. NATURAL DISASTER MITIGATION AND PLANNING

5 ADVISORY COMMITTEE.

6 ‘‘(a) ESTABLISHMENT.—There is established an inde7 pendent advisory committee within the executive branch

8 to be known as the Natural Disaster Mitigation and Plan9 ning Advisory Committee (in this section referred to as

10 the ‘Committee’). The Committee shall be subject to the

11 Federal Advisory Committee Act (5 U.S.C. Appendix 2),

12 except as provided in this section. The establishment of

13 the Committee shall not result in the creation of any new

14 permanent staff or new office facilities.

15 ‘‘(b) MEMBERSHIP.—The Committee shall be com16 posed of 20 members appointed by the Director. The

17 members shall be chosen from among citizens of the Unit18 ed States and shall include—

19 ‘‘(1) 1 individual who is a metropolitan fire

20 chief;

21 ‘‘(2) 1 individual who is a State fire marshal;

22 ‘‘(3) 1 individual who is a volunteer fire fighter;

23 ‘‘(4) 1 individual who is an organized labor rep24 resentative of the fire services;
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1 ‘‘(5) 1 individual with search and rescue exper2 tise;

3 ‘‘(6) 1 individual who is a State director of

4 emergency medical services;

5 ‘‘(7) 1 individual who represents the interests of

6 the model building code bodies;

7 ‘‘(8) 1 individual who is a State emergency

8 manager;

9 ‘‘(9) 1 individual who is a local emergency man10 ager;

11 ‘‘(10) 1 individual who is a flood plain man12 ager;

13 ‘‘(11) 1 individual who represents the interests

14 of law enforcement;

15 ‘‘(12) 1 individual who is an architect;

16 ‘‘(13) 1 individual who is a builder;

17 ‘‘(14) 1 individual who is a structural engineer;

18 ‘‘(15) 1 individual who represents a building

19 trades labor union;

20 ‘‘(16) 1 individual who is a recognized seismic

21 hazard mitigation expert;

22 ‘‘(17) 1 individual who is a recognized wind

23 hazard mitigation expert;

24 ‘‘(18) 1 individual who represents the interests

25 of consumers;
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1 ‘‘(19) 1 individual who represents the private

2 insurers; and

3 ‘‘(20) 1 individual who represents the insurance

4 agents.

5 ‘‘(c) VACANCIES.—A vacancy on the Committee shall

6 be filled in the manner in which the original appointment

7 was made.

8 ‘‘(d) CHAIRPERSON.—The Director shall designate a

9 chairperson of the Committee from among members se10 lected for appointment to the Committee.

11 ‘‘(e) SELECTION.—Not later than 180 days after the

12 date of the enactment of the Natural Disaster Protection

13 Act of 1993, after consultation with the State and local

14 emergency management community, the Director shall ap15 point the members of the Committee.

16 ‘‘(f) FUNCTIONS OF THE COMMITTEE.—The Com17 mittee shall advise the Director on hazard mitigation and

18 disaster planning, including the development and imple19 mentation of the multihazard mitigation programs created

20 pursuant to this title. The Committee shall review and

21 comment on all draft Federal regulations issued by the

22 Director pursuant to this title.

23 ‘‘(g) RESPONSIBILITIES OF THE DIRECTOR.—The

24 Director shall fully cooperate with the Committee and pro25 vide the Committee with access to personnel and informa-
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1 tion as the Committee considers necessary to carry out

2 its functions. The Director shall request comments from

3 the Committee on any questions regarding the operation

4 of multihazard mitigation programs established under this

5 title.’’.

6 SEC. 7. FEDERAL INSURANCE PROGRAMS.

7 The Earthquake Hazards Reduction Act of 1977 (42

8 U.S.C. 7701 et seq.) is amended by adding after title II,

9 the following new title:

10 ‘‘TITLE III—FEDERAL

11 INSURANCE PROGRAMS

12 ‘‘Subtitle A—Primary Insurance

13 Program

14 ‘‘SEC. 301. BASIC AUTHORITY AND PROGRAM OPERATION.

15 ‘‘(a) ESTABLISHMENT.—To carry out this subtitle,

16 the Director shall establish and carry out a national

17 multihazard insurance program (in this title referred to

18 as the ‘Primary Insurance Program’) to provide insurance

19 against loss resulting from physical damage to or loss of

20 real or personal property in any State or States, resulting

21 from an earthquake or volcanic eruption (including any

22 fire proximately caused by a volcanic eruption).

23 ‘‘(b) IMPLEMENTATION.—To carry out the Primary

24 Insurance Program, the Director shall arrange for partici25 pation, on other than a risk-sharing basis, by private in-
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1 surers, insurance agents and brokers, insurance adjust2 ment organizations, and other persons.

3 ‘‘(c) AUTHORITY OF DIRECTOR.—The Director may

4 take any actions reasonably necessary and appropriate to

5 carry out this subtitle, including the making of contracts,

6 the employment and compensation of persons, the acquisi7 tion of real and personal property, and the reasonable au8 diting of private insurers participating in the Primary In9 surance Program limited to matters directly related to

10 their participation in such program.

11 ‘‘(d) INSURANCE PRACTICES.—Actions of the Direc12 tor under this subtitle shall be consistent with standard

13 insurance practices and generally accepted accounting, ac14 tuarial, and underwriting principles.

15 ‘‘(e) FLOOD INSURANCE STUDY.—

16 ‘‘(1) EVALUATION.—The Director shall evaluate

17 the feasibility and benefits of including flood as a

18 covered peril under the national multihazard insur19 ance program. The evaluation shall include an exam20 ination of whether to integrate existing flood insur21 ance policies issued under the National Flood Insur22 ance Act of 1968 (42 U.S.C. 4001 et seq.) into the

23 multihazard coverage policy issued under this sub24 title.
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1 ‘‘(2) REPORT.—Not later than 1 year after the

2 date of enactment of the Natural Disaster Protec3 tion Act of 1993, the Director shall submit a report

4 to Congress, including any recommendations with re5 spect to the evaluation undertaken pursuant to this

6 subsection.

7 ‘‘(f) IMPROVED PARTICIPATION IN FEDERAL FLOOD

8 INSURANCE PROGRAM.—

9 ‘‘(1) NOTIFICATION REQUIREMENT.—Agents

10 and brokers or private insurers participating in the

11 Federal flood insurance program under the National

12 Flood Insurance Act of 1968 (42 U.S.C. 4001 et

13 seq.) shall promptly notify the Director of any pol14 icyholder who refuses to purchase Federal flood in15 surance if the policyholder is required under the Na16 tional Flood Insurance Act of 1968 to purchase such

17 coverage as a condition of receiving Federal assist18 ance for acquisition or construction of the insured

19 property, and the agent, broker, or private insurer

20 knows of such requirement.

21 ‘‘(2) OBLIGATION OF FEDERAL EMERGENCY

22 MANAGEMENT AGENCY.—

23 ‘‘(A) GENERAL AUTHORITY.—Not later

24 than 180 days after receiving notification of a

25 policyholder under paragraph (1), the Director
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1 shall take necessary and appropriate steps to

2 ensure that the policyholder purchases the re3 quired Federal flood insurance coverage in com4 pliance with the National Flood Insurance Act

5 of 1968 (42 U.S.C. 4001 et seq.).

6 ‘‘(B) REPORT.—Not later than 180 days

7 after the enactment of the Natural Disaster

8 Protection Act of 1993, the Director shall sub9 mit to Congress a report on any additional

10 sanctions, or other measures, that the Director

11 determines are necessary and appropriate to en12 sure that policyholders are in compliance with

13 the National Flood Insurance Act of 1968 (42

14 U.S.C. 4001 et seq.).

15 ‘‘(3) REGULATIONS.—The Director shall pro16 mulgate such regulations as are necessary to carry

17 out this subsection.

18 ‘‘SEC. 302. SCOPE OF PROGRAM.

19 ‘‘(a) ELIGIBLE PROPERTIES.—In carrying out the

20 Primary Insurance Program, the Director shall make

21 multihazard coverage available only for residential prop22 erties that are located in earthquake and volcanic erup23 tion-prone States as determined under section 201.

24 ‘‘(b) ADDITIONAL TYPES OF PROPERTIES.—If the

25 Director makes a finding, in consultation with the Federal
35

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1 Insurance and Reinsurance Advisory Committee estab2 lished pursuant to section 322, that the private insurance

3 industry cannot adequately provide coverage to other types

4 of properties, the Director may recommend to Congress

5 that multihazard coverage under this subtitle be made

6 available to cover other types of properties.

7 ‘‘SEC. 303. TERMS AND LIMITATIONS OF INSURANCE COV8 ERAGE.

9 ‘‘(a) TERMS.—Pursuant to the plan of operation es10 tablished under section 321 and after consultation with

11 the Federal Insurance and Reinsurance Advisory Commit12 tee established under section 322, the Director shall estab13 lish, by regulation, the general terms and conditions of

14 insurability for properties eligible for multihazard cov15 erage under section 302. Such regulations shall meet the

16 requirements of this section and may include—

17 ‘‘(1) the type and locational classification of the

18 eligible properties;

19 ‘‘(2) specific insurability definitions for eligible

20 properties;

21 ‘‘(3) the specific types of damage that may be

22 covered by the insurance;

23 ‘‘(4) appropriate premium rates consistent with

24 the actuarial requirement of section 304;
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1 ‘‘(5) appropriate loss-deductibles including vari2 able deductibles based on the existence of loss-reduc3 tion measures that affect the risk of loss;

4 ‘‘(6) appropriate limits on coverage for each

5 classification of eligible properties;

6 ‘‘(7) appropriate minimum coverage amounts

7 for each classification of eligible properties, which

8 may not be less than the outstanding principal bal9 ance of the mortgage loan securing the property or

10 the maximum coverage limit for the property under

11 paragraph (6), whichever is less; and

12 ‘‘(8) any other terms and limitations relating to

13 residential property insurance coverage that may be

14 necessary to carry out this subtitle.

15 ‘‘(b) HAZARDS COVERED.—The multihazard cov16 erage under this subtitle shall cover damage to covered

17 eligible property, including debris removal, additional liv18 ing expenses incurred as a result of direct damage to the

19 premises, and ordinance and law coverage up to the policy

20 limits set by subsection (a)(5) with additional ordinance

21 and law coverage available pursuant to the plan of oper22 ation under section 321, proximately caused by—

23 ‘‘(1) an earthquake, except for any fire proxi24 mately caused by an earthquake;
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1 ‘‘(2) a volcanic eruption, including any fire

2 proximately caused by a volcanic eruption; and

3 ‘‘(3) a tsunami associated with an earthquake

4 or volcanic eruption.

5 ‘‘(c) PROGRAM PARTICIPATION.—Upon the issuance

6 of regulations establishing the plan of operation under sec7 tion 321, any private insurer may participate in the Pri8 mary Insurance Program without regard to whether such

9 private insurer provides any insurance to residential prop10 erty policyholders.

11 ‘‘(d) OBLIGATIONS OF PARTICIPATING INSURERS.—

12 A private insurer electing to participate in the Primary

13 Insurance Program shall provide to all its residential prop14 erty policyholders for residential property determined to

15 be eligible under subsection (a) and located in earthquake

16 and volcanic eruption-prone States either—

17 ‘‘(1) the multihazard coverage under this sub18 title; or

19 ‘‘(2) coverage on its own behalf that is equiva20 lent to the multihazard coverage provided under this

21 subtitle at rates established for the coverage under

22 this subtitle.

23 ‘‘(e) OBLIGATIONS OF NONPARTICIPATING INSUR24 ERS.—Any private insurer electing not to participate in

25 the Primary Insurance Program shall notify, pursuant to
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1 regulations adopted by the Director, all of its residential

2 policyholders in earthquake and volcanic eruption-prone

3 States of its nonparticipation in such program, and of the

4 absence of insurance and reinsurance protection for

5 multihazard coverage under this title.

6 ‘‘SEC. 304. ACTUARIALLY SOUND RATES.

7 ‘‘(a) ESTABLISHMENT OF RATES.—The Director

8 shall from time-to-time establish and prescribe by regula9 tion on a State, risk zone, or other appropriate basis, actu10 arially sound rates for types or classes of property eligible

11 for multihazard coverage and the terms and conditions

12 under which the rates apply.

13 ‘‘(b) CONSULTATION.—In carrying out this section,

14 the Director shall consult with the Federal Insurance and

15 Reinsurance Advisory Committee established under sec16 tion 322 and may enter into contracts, agreements, or

17 other arrangements to utilize the services of the United

18 States Geological Survey, the National Oceanic and At19 mospheric Administration, and other relevant Federal,

20 State, and local governmental agencies, and other persons.

21 ‘‘(c) CONSIDERATIONS.—The Director shall establish

22 actuarially sound rates under this section based on—

23 ‘‘(1) considerations of the risks involved, includ24 ing an examination of—
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1 ‘‘(A) the severity and frequency of earth2 quakes by seismic zone and States in which the

3 insured property is located, including known

4 differences in risks from active faults and

5 known susceptibility to landslide, site amplifi6 cation, and liquefaction;

7 ‘‘(B) the risk of damage associated with a

8 volcanic eruption by volcanic zone and States in

9 which the insured property is located, including

10 proximity to known lava flows;

11 ‘‘(C) the risk of damage associated with a

12 tsunami caused by an earthquake or volcanic

13 eruption;

14 ‘‘(D) the value of the insured property;

15 ‘‘(E) the age of the structures located on

16 the insured property;

17 ‘‘(F) the construction type of the struc18 tures located on the insured property, including

19 woodframe, masonry, and masonry veneer;

20 ‘‘(G) the architectural type of the struc21 tures located on the insured property, including

22 soft first floor, box construction, and split level;

23 ‘‘(H) hazard mitigation measures followed

24 in the construction or subsequent retrofitting of

25 residential property structures; and
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1 ‘‘(I) any other relevant criteria; and

2 ‘‘(2) application of accepted actuarial and rate3 making principles that reflect the risks involved, an4 ticipated insurance-related administrative and oper5 ating costs and loss and loss-adjustment expense

6 payments, contributions from the Self-Sustaining

7 Mitigation Fund established under section 206, and

8 provision for adequate reserves.

9 ‘‘(d) MINIMIZATION OF CROSS-SUBSIDIZATION.—To

10 the extent practicable, the rates established under this sec11 tion shall be actuarially sound and shall result in a mini12 mum of cross-subsidization by reasonably reflecting the

13 risk of damaging earthquakes, volcanic eruptions, and

14 tsunamis, as appropriate, in total and for each

15 subclassification of policyholders.

16 ‘‘(e) ACTUARIALLY SOUND REQUIREMENT.—In set17 ting and adjusting rates under this section, the Director

18 shall provide that, over an extended period of time, ex19 pected expenditures from the Primary Insurance Program

20 Fund under section 305(c) do not exceed expected receipts

21 of the Primary Insurance Program Fund under section

22 305(b).

23 ‘‘(f) LIMITATIONS.—

24 ‘‘(1) RATE CLASSIFICATION SYSTEM.—To the

25 extent practicable, any rate classification system de-
41

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1 veloped by the Director to establish actuarially

2 sound rates under this section shall be—

3 ‘‘(A) cost-effective and shall not impose

4 costs for the initial establishment or the subse5 quent administration of the rating plan that are

6 disproportionate to the size of the insurance

7 premiums collected; and

8 ‘‘(B) simple and easy to understand, iden9 tify, and use by insurance agents and policy10 holders.

11 ‘‘(2) LIMITATION ON USE OF PREMIUMS.—The

12 premiums collected under the Primary Insurance

13 Program shall not be used to establish highly spe14 cific geographic rating zones and micro-zonation

15 maps for the earthquake, volcanic eruption, and tsu16 nami perils.

17 ‘‘SEC. 305. PRIMARY INSURANCE PROGRAM FUND.

18 ‘‘(a) ESTABLISHMENT.—There is established in the

19 Treasury of the United States the Primary Insurance Pro20 gram Fund (in this section referred to as the ‘‘Insurance

21 Fund’’) for the purpose of carrying out the Primary Insur22 ance Program under this subtitle.

23 ‘‘(b) CREDITS OF FUND.—The Insurance Fund shall

24 be credited with—
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1 ‘‘(1) insurance premiums received by the Direc2 tor under the Primary Insurance Program (less any

3 amounts credited to the Self-Sustaining Mitigation

4 Fund under section 206) and interest earned on pre5 miums, as provided in subsection (e);

6 ‘‘(2) amounts borrowed under section 306;

7 ‘‘(3) amounts appropriated to the Insurance

8 Fund; and

9 ‘‘(4) interest earned on amounts invested under

10 subsection (d).

11 ‘‘(c) USES OF FUND.—Amounts in the Insurance

12 Fund shall be available for—

13 ‘‘(1) payments for losses and loss adjustment

14 expenses under subsection (f);

15 ‘‘(2) payments for insurance company expense

16 allowances paid (including agents’ commissions,

17 State premium taxes, and companies’ administration

18 expenses);

19 ‘‘(3) any and all administrative and operating

20 expenses in carrying out the Primary Insurance Pro21 gram; and

22 ‘‘(4) principal and interest payments on

23 amounts borrowed under section 306 for supple24 mental losses, if any.
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1 ‘‘(d) INVESTMENT OF AMOUNTS.—The Director may

2 request the Secretary of the Treasury to invest any

3 amount in the Primary Insurance Program Fund in obli4 gations issued or guaranteed by the United States, as the

5 Director considers appropriate.

6 ‘‘(e) INSURANCE PAYMENTS TO FUND.—

7 ‘‘(1) IN GENERAL.—Each private insurer issu8 ing multihazard coverage shall remit the premiums

9 collected, less the expense allowances of the insurer

10 (as provided for in the plan of operation under sec11 tion 321), to the Director on a quarterly basis 30

12 days after the end of the quarter, according to the

13 procedures prescribed in the plan of operation.

14 ‘‘(2) ACCOUNTS.—Each private insurer shall

15 maintain a separate, interest-bearing account for the

16 premiums to be submitted to the Director.

17 ‘‘(3) INTEREST.—The interest collected on the

18 account shall be forwarded to the Insurance Fund

19 with the premiums on a quarterly basis.

20 ‘‘(f) REIMBURSEMENT OF INSURERS.—

21 ‘‘(1) REQUIREMENT AND PROCEDURE.—The

22 Director shall reimburse each private insurer provid23 ing multihazard coverage pursuant to this subtitle

24 from amounts made available from the Insurance

25 Fund. Reimbursement for all claim payments up to
44

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1 and including the policy limits of coverage and for

2 all loss adjustment expenses paid as a result of an

3 earthquake, volcanic eruption, or tsunami, as appro4 priate, shall be made as follows:

5 ‘‘(A) Not later than 30 days after the date

6 on which a claim payment or loss adjustment

7 expense payment is made pursuant to obliga8 tions of the Federal Government, the Director

9 shall reimburse the insurer.

10 ‘‘(B) If the gross reimbursements exceed

11 amounts available in the Insurance Fund,

12 amounts borrowed from the Treasury of the

13 United States under section 306 shall cover the

14 supplemental losses.

15 ‘‘(2) REGULATIONS.—

16 ‘‘(A) ISSUANCE.—The Director may issue

17 regulations establishing the general method or

18 methods by which proved and approved claims

19 for losses may be adjusted and paid for dam20 ages covered by the multihazard coverage issues

21 under this subtitle.

22 ‘‘(B) CONFORMANCE WITH STATE LAW.—

23 The claim practices of the Insurance Fund shall

24 be subject to and conform with any applicable

25 State insurance unfair trade practices statutes.
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1 ‘‘(C) JUDICIAL REVIEW.—Judicial review

2 of a decision of the Director regarding reim3 bursement of a private insurer shall be available

4 pursuant to section 321(e).

5 ‘‘(g) OBLIGATIONS.—All multihazard coverage pro6 vided through the Primary Insurance Program under this

7 subtitle shall constitute obligations of the United States.

8 The full faith and credit of the United States is pledged

9 for the full payment and performance of such obligations.

10 The private insurers participating in the program shall

11 bear no risk and shall assume no liability for the

12 multihazard coverage provided through the program.

13 ‘‘(h) STATUS OF FUND.—Premiums collected for de14 posit in the Insurance Fund shall be exempt from all tax15 ation now or hereafter imposed by the United States, by

16 any territory, dependency or possession thereof, or by the

17 State, county, municipality, or local taxing authority, ex18 cept that the insurance policies issued by or in conjunction

19 with the Federal Government pursuant to this title shall

20 be subject to State insurance premium taxes.

21 ‘‘SEC. 306. BORROWING FROM TREASURY.

22 ‘‘(a) AUTHORITY.—

23 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

24 to the extent that the accumulated assets, including

25 any return on investments, in the Primary Insurance
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•S 1350 IS

1 Program Fund established under section 305 are in2 sufficient to pay claims and expenses, the Director

3 shall issue, from time-to-time, to the Secretary of

4 the Treasury, notes and other obligations to cover

5 the insufficiency.

6 ‘‘(2) LIMITATIONS ON OBLIGATIONS.—The

7 amounts of such obligations outstanding at any one

8 time shall not exceed such sums as the Congress

9 may provide acting upon the recommendation of the

10 Director.

11 ‘‘(b) INTEREST RATE.—Obligations under subsection

12 (a) shall bear interest at a rate determined by the Sec13 retary of the Treasury, taking into consideration the cur14 rent average market yield on outstanding marketable obli15 gations of the United States of comparable maturities.

16 ‘‘(c) DEPOSITS.—Amounts borrowed by the Director

17 under this section shall be deposited in the Primary Insur18 ance Program Fund established under section 305.

19 ‘‘(d) REPAYMENT.—

20 ‘‘(1) IN GENERAL.—Amounts borrowed under

21 this section shall be recouped, including interest on

22 the borrowed funds, in future premiums for

23 multihazard coverage pursuant to the plan of oper24 ation established under section 321.
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1 ‘‘(2) EXTENSIONS.—The Secretary of the

2 Treasury shall grant extensions in repayment sched3 ules that the Director advises the Secretary are nec4 essary.

5 ‘‘SEC. 307. INSURANCE MITIGATION INCENTIVES.

6 ‘‘In carrying out the Primary Insurance Program

7 under this subtitle and pursuant to the plan of operation

8 established under section 321, the Director shall provide

9 for the following insurance mitigation incentives which

10 shall conform with the actuarially sound rate requirements

11 of section 304:

12 ‘‘(1) Charging lower premiums or deductible

13 amounts for any residential property located in an

14 earthquake-prone State that meets the seismic build15 ing standards under section 202(a).

16 ‘‘(2) Charging lower premium rates or deduct17 ible amounts for any residential property located in

18 an earthquake-prone State that passes a seismic

19 safety inspection and meets the requirements of the

20 seismic mitigation standards established in title II.

21 ‘‘(3) Charging lower premium rates or deduct22 ible amounts for new residential property not con23 structed in volcanic zones in a volcanic eruption24 prone State.
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1 ‘‘Subtitle B—Reinsurance Program

2 ‘‘SEC. 311. BASIC AUTHORITY AND PROGRAM OPERATION.

3 ‘‘(a) ELIGIBILITY.—

4 ‘‘(1) PROVISION OF COVERAGE.—Upon the issu5 ance of regulations establishing the plan of operation

6 under section 321, the Director shall make available

7 to eligible entities excess reinsurance coverage for

8 any direct and indirect losses under the covered lines

9 set forth in section 313 that arise from a hurricane,

10 earthquake, volcanic eruption, or tsunami.

11 ‘‘(2) ELIGIBLE ENTITIES.—The following enti12 ties are eligible to purchase the excess reinsurance

13 coverage:

14 ‘‘(A) A private insurer participating in the

15 Primary Insurance Program under subtitle A.

16 ‘‘(B) A private reinsurer that reinsures a

17 private insurer participating in the Primary In18 surance Program under subtitle A.

19 ‘‘(C) A workers’ compensation fund oper20 ated by a State.

21 ‘‘(D) A State residual insurance pooling

22 program.

23 ‘‘(b) TERMS.—The reinsurance contracts issued by

24 the Federal Government pursuant to this subtitle shall
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1 contain terms and conditions similar to those generally

2 used in private catastrophic reinsurance contracts.

3 ‘‘(c) JUDICIAL REVIEW.—Judicial review of a deci4 sion of the Director regarding payment of claims shall be

5 made available pursuant to section 321(e).

6 ‘‘(d) SINGLE ENTITIES.—A private insurer and pri7 vate reinsurer or United States affiliate under the same

8 ownership or management or part of the same holding

9 company system, as determined under the plan of oper10 ation established under section 321, shall be considered

11 a single entity for purposes of this subtitle.

12 ‘‘SEC. 312. LEVELS OF RETAINED LOSSES.

13 ‘‘(a) INDUSTRYWIDE ELIGIBILITY.—Excess reinsur14 ance under this subtitle shall be available to all private

15 insurers and private reinsurers eligible for reinsurance

16 pursuant to section 311(a)(2) in accordance with this sub17 section:

18 ‘‘(1) INDUSTRY RETAINED LOSSES.—

19 ‘‘(A) IN GENERAL.—The Reinsurance

20 Fund established under section 315 shall pro21 vide excess reinsurance when, as determined by

22 the Director pursuant to the plan of operation

23 under section 321, the insurance industry is

24 likely to incur gross losses in the lines covered

25 in section 313(a) arising from hurricane, earth-
50

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1 quake, volcanic eruption, and tsunami events

2 occurring during any 12-month period that ex3 ceed 15 percent of the consolidated industry

4 surplus as regards policyholders.

5 ‘‘(B) CALCULATION.—Only such separate

6 events that will likely result in industry gross

7 losses of at least $1,500,000,000, adjusted an8 nually in accordance with the percentage

9 change in the Consumer Price Index, shall be

10 aggregated to reach the 15 percent level for

11 gross losses described in subparagraph (A).

12 ‘‘(2) INDIVIDUAL COMPANY RETAINED

13 LOSSES.—After the insurance industry has sustained

14 gross losses described in paragraph (1), the Reinsur15 ance Fund established under section 315 shall pay

16 to an individual private insurer or private reinsurer

17 95 percent of qualifying losses in excess of 15 per18 cent of the consolidated surplus as regards policy19 holders of the private insurer or private reinsurer.

20 ‘‘(b) INDIVIDUAL INSURER ELIGIBILITY.—

21 ‘‘(1) INDIVIDUAL INSURER RETAINED

22 LOSSES.—If subsection (a) is not applicable, a pri23 vate insurer or private reinsurer shall be eligible for

24 excess reinsurance coverage and reimbursement from

25 the Reinsurance Fund established under section 315
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1 if the insurer or reinsurer has incurred gross losses

2 from a single—

3 ‘‘(A) earthquake, volcanic eruption, or tsu4 nami event that is included in the lines covered

5 in section 313(a) and that exceeds 20 percent

6 of the consolidated surplus as regards policy7 holders of the private insurer or private rein8 surer; or

9 ‘‘(B) hurricane event that is included in

10 the lines covered in section 313(a) and that ex11 ceeds 20 percent of the consolidated surplus as

12 regards policyholders of the private insurer or

13 private reinsurer, except that the workers’ com14 pensation and earthquake lines of coverage

15 under section 313(a) shall be excluded.

16 ‘‘(2) REINSURANCE FUND PAYMENTS.—After

17 the private insurer or private reinsurer has sustained

18 gross losses described in paragraph (1), the Reinsur19 ance Fund established under section 315 shall pay

20 95 percent of qualifying losses, as defined in sub21 section (d), in excess of 20 percent of the consoli22 dated surplus as regards policyholders of the private

23 insurer or the private reinsurer.

24 ‘‘(3) LIMITATION OF REINSURANCE FUND PAY25 MENTS.—The payments by the Reinsurance Fund
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1 under this subsection shall be limited to 200 percent

2 of the consolidated surplus as regards policyholders

3 of the private insurer or private reinsurer.

4 ‘‘(c) STATE INSURANCE PROGRAMS.—Excess rein5 surance under this subtitle shall be available to each State

6 workers’ compensation program and State residual insur7 ance pooling program eligible for reinsurance pursuant to

8 section 311(a)(2) in accordance with the following:

9 ‘‘(1) INDUSTRY LOSSES.—The Reinsurance

10 Fund established under section 315 shall provide ex11 cess reinsurance when, as determined by the Direc12 tor pursuant to the plan of operation under section

13 321, the insurance industry is likely to incur gross

14 losses in the State served by the eligible State insur15 ance program arising from hurricane, earthquake,

16 volcanic eruption, and tsunami events occurring dur17 ing any 12-month period and exceed 10 times the

18 sum of the direct earned premiums for the lines of

19 coverage described in sections 313(a) (2), (3), (4),

20 and (5) or $10,000,000,000, adjusted annually in

21 accordance with the percentage change in the

22 Consumer Price Index, whichever amount is less.

23 ‘‘(2) MINIMUM LOSSES.—The lesser amount de24 scribed in paragraph (1) must equal at least
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1 $500,000,000, adjusted annually in accordance with

2 the percentage change in the Consumer Price Index.

3 ‘‘(3) RETAINED LOSSES.—After the insurance

4 industry has sustained gross losses described in

5 paragraph (1), the Reinsurance Fund established

6 under section 315 shall pay to an individual State

7 workers’ compensation program or State residual in8 surance pooling program 95 percent of qualifying

9 losses in excess of the lessor amount described in

10 paragraph (1).

11 ‘‘(d) QUALIFYING LOSSES.—For the purposes of this

12 subtitle, ‘qualifying losses’ includes—

13 ‘‘(1) the losses and loss adjustment expenses in14 curred by a private insurer, private reinsurer, State

15 workers’ compensation fund, or State residual insur16 ance pooling program; and

17 ‘‘(2) any assessments, surcharges, or other li18 abilities imposed by any State residual insurance

19 pooling program or guaranty fund,

20 attributable to hurricanes, earthquakes, volcanic erup21 tions, and tsunamis occurring during any 12-month period

22 encompassing the events described in subsections (a)(1)

23 and (c)(1) or the event described in subsection (b)(1), re24 duced by—

25 ‘‘(1) any collectible reinsurance recoverable, and
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1 ‘‘(2) an appropriate percentage of any

2 uncollectible reinsurance arising from the event as

3 set in the plan of operation to be issued by regula4 tion under section 321.

5 ‘‘(e) OBLIGATIONS.—All reinsurance contracts issued

6 under this subtitle shall constitute obligations, in accord7 ance with the terms of the reinsurance, of the United

8 States. The full faith and credit of the United States is

9 pledged for the full payment and performance of such obli10 gations.

11 ‘‘(f) DEFINITIONS.—As used in this subtitle—

12 ‘‘(1) the term ‘consolidated industry surplus as

13 regards policyholders’ means the consolidated sur14 plus as regards policyholders of the property and

15 casualty insurance industry (excluding life insur16 ance) for the calendar year immediately preceding

17 the hurricane, earthquake, volcanic eruption, or tsu18 nami events described in subsection (a)(1) as deter19 mined by the National Association of Insurance

20 Commissioners or other credible source and pub21 lished annually in the Federal Register by the Direc22 tor;

23 ‘‘(2) the term ‘consolidated surplus as regards

24 policyholders’ means the surplus as regards policy25 holders of the private insurer, private reinsurer, or
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1 group of private insurers and reinsurers (excluding

2 life insurance) based on financial data submitted to

3 the National Association of Insurance Commis4 sioners or other credible source and published annu5 ally in the Federal Register by the Director for the

6 calendar year immediately preceding the hurricane,

7 earthquake, volcanic eruption, or tsunami event or

8 events described in subsections (a)(1) and (b)(1);

9 ‘‘(3) the term ‘direct earned premiums’ means

10 the direct earned premiums for certain lines of prop11 erty and casualty insurance coverage as published in

12 the National Association of Insurance Commis13 sioners Fire and Casualty Annual Statement filed

14 with the applicable State department of insurance

15 for the most recent calendar year available preceding

16 the hurricane, earthquake, volcanic eruption, or tsu17 nami events described in subsection (c)(1);

18 ‘‘(4) the term ‘gross losses’ means all losses and

19 loss adjustment expenses, prior to deducting any pri20 vate reinsurance recoverables;

21 ‘‘(5) the term ‘subject net written premium’

22 means direct and reinsurance premiums received by

23 private insurers and private reinsurers, less pre24 miums paid for ceded reinsurance, for all lines of

25 coverage listed in section 313(a), except that work-
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1 ers’ compensation and earthquake lines of coverage

2 shall be excluded for the purposes of setting actuari3 ally sound rates for hurricanes; and

4 ‘‘(6) the term ‘uncollectible reinsurance’ means

5 reinsurance proceeds due and payable in accordance

6 with the terms of the reinsurance contract that are

7 not paid within 12 months of the due date.

8 ‘‘SEC. 313. LINES OF INSURANCE.

9 ‘‘(a) COVERED LINES.—The Director shall provide

10 reinsurance coverage to private insurers, State workers’

11 compensation funds and State residual insurance pooling

12 programs for all of the following lines of insurance appear13 ing in the National Association of Insurance Commis14 sioners Fire and Casualty Annual Statement:

15 ‘‘(1) Fire.

16 ‘‘(2) Allied Lines.

17 ‘‘(3) Farmowners Multiple Peril.

18 ‘‘(4) Homeowners Multiple Peril.

19 ‘‘(5) Commercial Multiple Peril.

20 ‘‘(6) Ocean Marine.

21 ‘‘(7) Inland Marine.

22 ‘‘(8) Earthquake.

23 ‘‘(9) Workers’ Compensation.

24 ‘‘(10) Other Liability.

25 ‘‘(11) Products Liability.
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1 ‘‘(12) Aircraft (All Perils).

2 ‘‘(13) Glass.

3 ‘‘(14) Burglary and Theft.

4 ‘‘(15) Boiler and Machinery.

5 ‘‘(16) Reinsurance.

6 Reinsurance coverage shall be purchased for all covered

7 lines of insurance and in all affected hurricane, seismic,

8 or volcanic rating zones in hurricane-prone, earthquake9 prone, or volcanic eruption-prone States with the rates for

10 such coverage set by the Director, pursuant to section

11 314.

12 ‘‘(b) OTHER LINES.—The Reinsurance Fund estab13 lished under section 315 shall provide reinsurance cov14 erage to private reinsurers for all of the lines of insurance

15 referred to in subsection (a) as well as other lines of insur16 ance appearing in the National Association of Insurance

17 Commissioners Fire and Casualty Annual Statement, as

18 determined by the Director in the plan of operation pursu19 ant to section 321 and in consultation with the Federal

20 Insurance and Reinsurance Advisory Committee estab21 lished under section 322.

22 ‘‘SEC. 314. ACTUARIALLY SOUND RATES.

23 ‘‘(a) ESTABLISHMENT OF RATES.—Using generally

24 accepted actuarial principles, the Director shall establish

25 the rates for the excess reinsurance coverage and adjust
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1 the rates when necessary. To the maximum extent prac2 ticable, such rates shall be actuarially sound and shall re3 sult in a minimum of cross-subsidization, consistent with

4 the infrequency of catastrophic hurricanes, earthquakes,

5 volcanic eruptions, and tsunamis. In setting and adjusting

6 the rates, the Director shall provide that, over an extended

7 period of time, expected expenditures from the Reinsur8 ance Fund under section 315(c) shall not exceed expected

9 receipts of the Reinsurance Fund under section 315(b).

10 ‘‘(b) CONSULTATION.—In carrying out this section,

11 the Director shall consult with the Federal Insurance and

12 Reinsurance Advisory Committee established in section

13 322 and may enter into contracts, agreements, or other

14 arrangements to utilize the services of the United States

15 Geological Survey, the National Oceanic and Atmospheric

16 Administration, and other relevant Federal, State, and

17 local governmental agencies, and other persons.

18 ‘‘(c) CONSIDERATIONS.—In setting or adjusting the

19 actuarially sound rates, the Director shall provide for a

20 minimum degree of cross-subsidization among classes of

21 reinsured by reasonably reflecting the differences in risk

22 of and vulnerability to loss from hurricanes, earthquakes,

23 and volcanic eruptions that would be subject to payment

24 from the Reinsurance Fund established under section 315,

25 by giving due consideration to—
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1 ‘‘(1) the premium rate volume of the reinsured

2 by line of insurance under section 313(a) by hurri3 cane, seismic, or volcanic zone or State in which the

4 risks insured or reinsured by the reinsurer are lo5 cated;

6 ‘‘(2) the proportion of the total expected

7 amount of payments for qualifying losses and loss

8 adjustment expenses by line of insurance under sec9 tion 313(a) by hurricane, seismic, or volcanic zone

10 or State expected for each reinsured;

11 ‘‘(3) the nature, scope, and adequacy of the pri12 vate reinsurance or retrocessional reinsurance pur13 chased by the private insurer, private reinsurer,

14 State workers’ compensation fund, or State residual

15 insurance pooling program in light of its manage16 ment expertise and the number, size, concentration,

17 and location of its risk exposures by lines of insur18 ance under section 313(a);

19 ‘‘(4) the payback of losses sustained by the Re20 insurance Fund established under section 315 due to

21 payments made to a private insurer, private rein22 surer, State workers’ compensation fund, or State

23 residual insurance pooling program;

24 ‘‘(5) the ratio between subject net written pre25 mium and consolidated surplus as regards policy-
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1 holders for each private insurer and reinsurer during

2 the most recent calendar year; and

3 ‘‘(6) the nature of the risk for each private in4 surer and reinsurer insured under coverages re5 ported in the National Association of Insurance

6 Commissioners Fire and Casualty Annual Statement

7 filed with the applicable State department of insur8 ance for the most recent calendar year and covering

9 the lines of businesses listed in section 313(a).

10 ‘‘(d) LIMITATION.—Any rate classification system

11 used by the Director under this section shall be cost-effec12 tive and shall not impose costs for the initial establishment

13 or the subsequent administration of the rating plan that

14 are disproportionate to the size of the insurance premiums

15 collected.

16 ‘‘(e) QUARTERLY PAYMENT.—Premiums paid to the

17 Reinsurance Fund for reinsurance coverage under this

18 subtitle shall be paid on a quarterly basis and shall be

19 accumulated in the Reinsurance Fund, to be managed

20 pursuant to section 315.

21 ‘‘SEC. 315. REINSURANCE FUND.

22 ‘‘(a) ESTABLISHMENT.—There is established in the

23 Treasury of the United States the Reinsurance Fund for

24 the purposes of carrying out the Reinsurance Program

25 under this subtitle.
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1 ‘‘(b) CREDITS TO FUND.—The Reinsurance Fund

2 shall be credited with—

3 ‘‘(1) any reinsurance premiums received by the

4 Director under the Reinsurance Program;

5 ‘‘(2) any amounts borrowed under section 316;

6 and

7 ‘‘(3) any amounts earned under subsection (d).

8 ‘‘(c) USE OF FUND.—The Reinsurance Fund shall be

9 available to the Director for—

10 ‘‘(1) payments for qualifying losses under the

11 Reinsurance Program under this subtitle;

12 ‘‘(2) administrative and operating expenses in

13 carrying out the Reinsurance Program; and

14 ‘‘(3) principal and interest payments on

15 amounts borrowed from the Treasury under section

16 316, if any.

17 ‘‘(d) INVESTMENT.—The Director shall request the

18 Secretary of the Treasury to invest any amounts in the

19 Reinsurance Fund in obligations issued or guaranteed by

20 the United States, as the Director considers appropriate.

21 ‘‘(e) STATUS OF FUNDS.—Any reinsurance premiums

22 collected for deposit in the Reinsurance Fund shall be ex23 empt from all taxation now or hereafter imposed by the

24 United States, by any territory, dependency or possession
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1 thereof, or by any State, county, municipality, or local tax2 ing authority.

3 ‘‘SEC. 316. BORROWING FROM TREASURY.

4 ‘‘(a) AUTHORITY.—

5 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

6 to the extent that the accumulated assets, including

7 any return on investments, in the Reinsurance Fund

8 are insufficient to pay claims and expenses, the Di9 rector shall issue, from time-to-time, to the Sec10 retary of the Treasury, notes and other obligations

11 to cover the insufficiency.

12 ‘‘(2) LIMITATION.—The amounts of obligations

13 outstanding at any one time shall not exceed such

14 sums as the Congress may provide acting upon the

15 recommendation of the Director.

16 ‘‘(b) INTEREST RATE.—Obligations under subsection

17 (a) shall bear interest at a rate determined by the Sec18 retary of the Treasury, taking into consideration the cur19 rent average market yield on outstanding marketable obli20 gations of the United States of comparable maturities.

21 ‘‘(c) DEPOSITS.—Any amounts borrowed by the Di22 rector under this section shall be deposited in the Reinsur23 ance Fund.

24 ‘‘(d) REPAYMENT.—Any amounts borrowed pursuant

25 to this section shall be recouped, including interest on the
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1 borrowed funds, in future rates for excess reinsurance cov2 erage pursuant to the plan of operation established under

3 section 321. The Secretary of the Treasury shall grant ex4 tensions in repayment schedules that the Director advises

5 the Secretary are necessary.

6 ‘‘Subtitle C—Program

7 Administration

8 ‘‘SEC. 321. PLAN OF OPERATION.

9 ‘‘(a) DEVELOPMENT.—The Director shall develop a

10 plan of operation to ensure the fair, reasonable, and equi11 table administration of the Primary Insurance Program

12 Fund established under section 305, the Reinsurance

13 Fund established under section 315, and other activities

14 under this title.

15 ‘‘(b) CONTENTS.—The plan of operation shall set

16 forth the specific policy and programmatic details for op17 erating the Primary Insurance Program created under

18 subtitle A and the Reinsurance Program created under

19 subtitle B, including all guidelines, criteria, definitions,

20 clarifications, and procedures necessary to carry out this

21 title.

22 ‘‘(c) ESTABLISHMENT.—

23 ‘‘(1) SUBMISSION OF DRAFT TO ADVISORY COM24 MITTEE.—Not later than the expiration of the 12-

25 month period beginning on the date of the enact-
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1 ment of the Natural Disaster Protection Act of

2 1993, the Director shall submit a draft of the plan

3 of operation to the Federal Insurance and Reinsur4 ance Advisory Committee established under section

5 322. Before issuing any regulations under paragraph

6 (2), the Director shall consider any recommenda7 tions made by the Advisory Committee regarding the

8 draft plan of operation.

9 ‘‘(2) REGULATIONS.—

10 ‘‘(A) IN GENERAL.—Not later than 18

11 months after the date of the enactment of the

12 Natural Disaster Protection Act of 1993, the

13 Director shall issue final regulations establish14 ing the plan of operation under this section,

15 subject to the provisions of subchapter II of

16 chapter 5 of title 5, United States Code.

17 ‘‘(B) DESCRIPTION OF DISCREPANCIES.—

18 In issuing regulations under this paragraph, the

19 Director shall publish in the Federal Register a

20 description of any differences between the rec21 ommendations of the Federal Insurance and

22 Reinsurance Advisory Committee established

23 under section 322 and the regulations (includ24 ing the guidelines, criteria, definitions, clarifica25 tions, and procedures under the plan) developed
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1 by the Director. The description shall contain,

2 for each difference, an explanation of why the

3 recommendations of the Federal Insurance and

4 Reinsurance Advisory Committee were not in5 cluded in the proposed regulations.

6 ‘‘(3) SUBSEQUENT CHANGES.—Any changes to

7 the plan of operation after the date of enactment of

8 the Natural Disaster Protection Act of 1993 shall be

9 made in accordance with the process described in

10 paragraphs (1) and (2).

11 ‘‘(d) ADDITIONAL REGULATIONS.—In addition to the

12 regulations establishing the plan of operation, the Director

13 may issue any regulations necessary to carry out this title,

14 pursuant to the provisions of subchapter II of chapter 5

15 of title 5, United States Code.

16 ‘‘(e) SUITS.—Any lawsuits by or against the Director

17 (or employees of the Federal Emergency Management

18 Agency) in connection with activities under this title shall

19 be brought in the district court of the United States with

20 jurisdiction over the action, except that any action by an

21 insurer or reinsurer against the Director (or employees of

22 the Federal Emergency Management Agency) shall be

23 brought in the United States District Court for the Dis24 trict of Columbia.
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1 ‘‘SEC. 322. FEDERAL INSURANCE AND REINSURANCE ADVI2 SORY COMMITTEE.

3 ‘‘(a) ESTABLISHMENT.—There is established an inde4 pendent advisory committee within the executive branch

5 to be known as the Federal Insurance and Reinsurance

6 Advisory Committee (in this section referred to as the

7 ‘‘Committee’’). To the extent not contradicted by the pro8 visions of this section, the Committee shall be subject to

9 the provisions of the Federal Advisory Committee Act (5

10 U.S.C. Appendix 2). The establishment of the Committee

11 shall not result in the creation of any new permanent staff

12 or new office facilities.

13 ‘‘(b) MEMBERSHIP.—The Committee shall be com14 posed of 7 members appointed by the Director. The mem15 bers shall be chosen from among citizens of the United

16 States and shall include—

17 ‘‘(1) 1 individual who represents the interests of

18 consumers;

19 ‘‘(2) 1 individual who is a State emergency

20 planner;

21 ‘‘(3) 1 individual who is a State insurance com22 missioner;

23 ‘‘(4) 1 individual who represents the interests of

24 the private insurers;

25 ‘‘(5) 1 individual who represents the interests of

26 the private reinsurers;
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1 ‘‘(6) 1 individual who represents the interests of

2 the insurance agents; and

3 ‘‘(7) 1 individual who is a professional actuary.

4 ‘‘(c) VACANCIES.—A vacancy in the Commission shall

5 be filled in the manner in which the original appointment

6 was made.

7 ‘‘(d) CHAIRPERSON.—The Director shall designate a

8 chairperson of the Committee from among members se9 lected for appointment to the Committee.

10 ‘‘(e) SELECTION.—Not later than 180 days after the

11 date of the enactment of the Natural Disaster Protection

12 Act of 1993 and after consulting with the insurance indus13 try and the State and local emergency management com14 munity, the Director shall appoint the members of the

15 Committee.

16 ‘‘(f) FUNCTIONS OF THE COMMITTEE.—

17 ‘‘(1) REVIEW OF DRAFT PLAN.—The Commit18 tee shall review the draft plan of operation estab19 lished under section 321.

20 ‘‘(2) COMMENTS AND RECOMMENDATIONS.—

21 Not later than 120 days after receiving the draft

22 plan of operation, the Committee shall submit to the

23 Director written comments and recommendations for

24 any changes to the plan.
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1 ‘‘(3) REPORTS.—After regulations establishing

2 the plan of operation have been issued, the commit3 tee shall submit a written report not less than once

4 every 180 days to the Director and the Congress

5 evaluating the operation of the Federal insurance

6 programs established under this title and making

7 recommendations for any actions relating to such

8 programs.

9 ‘‘(4) GUIDANCE.—The Committee shall provide

10 counsel to the Director regarding actuarial and in11 surance related services pursuant to sections 304(b)

12 and 314(b). The Committee shall respond as soon as

13 practicable to all requests of the Director made pur14 suant to subsection (g) or section 321(c).

15 ‘‘(g) RESPONSIBILITIES OF THE DIRECTOR.—The

16 Director shall fully cooperate with the Committee and pro17 vide the Committee with access to personnel and informa18 tion as the Committee considers necessary to carry out

19 its functions. The Director shall request comments from

20 the Committee on any questions regarding operation of

21 the Federal insurance programs established under this

22 title.’’.

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